US housing law seeks supply gains as buyers face record affordability strain

The 21st Century ROAD to Housing Act became law on Saturday without President Donald Trump’s signature, adding federal measures intended to increase homebuilding, widen mortgage access and curb some purchases by large rental-home owners. The statute arrives with the median U.S. existing-home price at $440,600 in June, 49.2% above its June 2020 level, according to the National Association of Realtors.

Congress passed the bipartisan housing package on June 23. House Speaker Mike Johnson, R-La., sent it to the White House on June 29, starting the period for presidential action. After 10 calendar days, excluding Sundays, the bill became law because Trump neither signed nor vetoed it.

Trump had canceled a June 24 signing ceremony for the measure, saying he would not sign it until Congress approved the SAVE America Act, a Republican-backed election bill that would require proof of U.S. citizenship to register to vote. The cancellation delayed enactment and surprised lawmakers in both parties, according to CNBC.

Affordability pressure remains acute

The law addresses a housing market where high borrowing costs and limited inventory have kept many households from buying. Thirty-year fixed mortgage rates remain above 6.5%, according to Mortgage News Daily. Realtor.com estimates the U.S. housing shortfall at about 4 million homes.

Bill Owens, chairman of the National Association of Home Builders, said after the bill cleared Congress that the measure should support supply growth by reducing regulatory obstacles and encouraging local changes to zoning and land-use rules that have constrained construction.

Selma Hepp, chief economist at real estate data company Cotality, said the legislation focuses on several cost drivers, including land-use limits, slow permitting, financing barriers and regulation. She also cautioned that buyers should not expect rapid relief because development timelines are long and the benefits would probably appear gradually.

Restrictions on large single-family buyers

One provision bars large institutional investors that own at least 350 single-family homes from buying more single-family properties, with exceptions. Those exceptions include certain build-to-rent and renovate-to-rent projects, as well as programs designed to help renters establish credit and eventually buy homes.

Supporters say the restriction could reduce competition from corporate buyers in selected markets, including some Sun Belt areas where institutional ownership has drawn political scrutiny. Economists cited by CNBC have said institutional investor purchase activity remains relatively limited in many markets, including some where the issue has received attention.

Manufactured housing and smaller mortgages

The law also changes the federal definition of a manufactured home. It expands the category to include homes built without a permanent steel chassis, the metal frame traditionally used to transport manufactured and mobile homes. The Lincoln Institute of Land Policy has said few such homes are moved after placement.

The Niskanen Center, a nonpartisan think tank, has said removing the chassis requirement could lower the cost of a manufactured home by $5,000 to $10,000. Supporters of the change argue that factory-built housing can provide a lower-cost entry point to ownership than many site-built homes.

Another provision creates a four-year pilot program for mortgages below $100,000. Some lenders avoid these loans because fixed compliance expenses can make them less attractive to originate. The pilot includes subsidies for lenders that make small mortgages and grants for borrowers to cover down payments and closing costs.

John Walkup, co-founder of UrbanDigs, a New York real estate pricing intelligence platform, said the legislation may help supply at the margin, rather than quickly. He said homebuilding depends on local variables including construction costs, labor, land prices, infrastructure, zoning rules and community opposition, which limits how much federal legislation can accomplish on its own.

This story draws on original reporting from CNBC.