On the 21st Century ROAD to Housing: What Congress Accomplished in 2026 and What Remains to Be Done

The 21^st Century ROAD to Housing Act became law on July 11, 2026. A bipartisan effort to promote housing (passed 85–5 in the Senate and 358–32 in the House), it was enacted without the signature of the president, who referred to it as “a yawn.” What are the act's principal provisions that might lead to more housing? How quickly will we see the housing, and will it be enough to improve affordability and reduce the housing shortage? (See the Congressional Research Service’s detailed summary.) Is the legislation indeed a modern highway to more and better housing or “a yawn” that changes little?

Let’s start with some background on why housing has become an important issue at the federal level. Many researchers have estimated that the US has a housing shortage of between 1 and 7 million units. See, for example, the Freddie Mac study with a midpoint estimate of slightly under 4 million units. These analyses look at trends and point out that we have been building fewer units relative to population growth and other factors (e.g., demographics). In many ways, the shortage is not a classic supply shortage—where supply is disrupted or constrained—but rather a finding that housing costs have outpaced incomes and, as a result, fewer units are being produced than has historically been the trend. 

Hence, there has been a focus on how housing has become less affordable. Over the last five years, house prices have increased by 49%, while incomes have increased by only 27% (see Table 1). 

Table 1: Change in Housing Affordability since 2020

Source: Federal Housing Finance Agency (FHFA) and Census

Housing unaffordability appears even starker under another measure of homeownership costs that factors in the annual cash outlays for a house such as mortgage and insurance costs. For example, rates on a 30-year mortgage averaged 3.11% in 2020 and increased to 6.62% in 2025. Between higher home prices, higher mortgage rates, and higher costs of insuring a house, the monthly housing expenses of someone who buys a home have more than doubled in five years, even after higher wages are accounted for.

What can the federal government do to address these issues, and do such measures appear in the ROAD to Housing Act? In broad terms, the government has two levers to address affordability: 

1. Reduce (real) costs of building, rehabbing, and financing homes 
2. Subsidize building, rehabbing, and financing homes

Policy Lever 1: Reducing Costs

As a general matter, housing construction is a competitive market, with local governments playing the predominant role in regulating many aspects that affect housing costs, including zoning, permitting, building codes, fire codes, and water/sewer hookups. There are over 20,000 local government entities involved in these matters. The federal government plays little direct role in these areas, with a few exceptions such as in manufactured housing, where the entire unit is factory built and shipped to a site, and in the environmental area (e.g., designation of flood zones, review of effects on endangered species, and compliance with water/air quality standards in certain cases).

The federal government does control the US mortgage market through Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs and could drive down financing costs.

So, what in the new act addresses costs?

Revoking the “Chassis Rule” in Manufactured Housing and Streamlining Environmental Reviews

Although it may sound like a technical and small issue, the new act's elimination of what is known as the "chassis rule" in manufactured housing may be its most important provision. Manufactured housing accounts for about 100,000 units per year. (At their peak, about half a million manufactured units were produced each year; today, approximately 6% of the housing stock is manufactured housing.) Since the 1970s, the Department of Housing and Urban Development (HUD) has imposed standards for these units that override local building codes, allowing them to benefit from scale and lower costs than site-built housing. By statute, however, each unit had to have a steel chassis so that it could be easily moved from the lot where it was first installed. 

Although originally thought of as a pro-consumer requirement, in practice, units are almost never relocated, and yet this requirement adds $10,000 or about 10% to the cost of the unit. Furthermore, the presence of the chassis makes it difficult to stack units vertically to create a 2-story manufactured house. The reform of this requirement could allow tens of thousands of new housing units to be quickly added to supply—and at prices affordable to moderate-income first-time home buyers (see the associated Urban Institute Report).

Beyond just reducing costs, the striking-down of the chassis rule may allow factory built modular housing to qualify for exemption from local building codes. The factory built housing industry has yet to achieve the scale in the US that it has in Asia and Europe, but this development could help in the long run if HUD were to extend federal preemption of local laws to this industry. 

In addition, under the National Environmental Policy Act, HUD must review the environmental impact of certain multifamily projects. The ROAD to Housing Act streamlines these reviews, especially for multifamily properties with 15 or fewer units. In general, these reviews touch only a limited number of properties (~10,000 units per year).

Other Provisions to Reduce Building Costs

The act requires studies on how to reduce costs to build new houses. For example, it requires that HUD publish “best practices” for local zoning laws and funds a program to develop standardized blueprints for duplexes and townhomes. 

The act also tries to incentivize more building. When allocating Community Development Block Grants (CDBG) to local governments, HUD is to reward those communities that are building more. However, the entire CDBG program is only $3 billion, many factors determine who receives the grants, and the Trump administration has proposed eliminating the program entirely. 

These provisions may have some small effect in the long run but are unlikely to add any units of housing in the next few years. 

Reducing Housing Financing Costs

The act does little in the housing finance arena. It contains a small increase in FHA multifamily loan limits. There are many areas where the housing finance system could be made more cost-effective through adoption of new technologies (for example, around appraisals and title insurance) or elimination of unnecessary costs (for example, around mortgage insurance and refinancing). The act does not address these issues, but most such reforms could be made under current law.

Policy Lever 2: Subsidizing Housing

The ROAD to Housing Act has no subsidies to housing. The Congressional Budget Office estimates the legislation's total 10-year effect on the deficit at a mere $6 million dollars. The largest federal programs to subsidize housing directly are Section 8 vouchers, at an annual cost of approximately $55 billion. Subsidies for public housing and housing of the homeless account for another $15 billion. The act made no changes to these programs. The Low-Income Housing Tax Credit (LIHTC) provides indirect annual subsidies to build housing and costs about $9 billion. The act made minor changes to this program but did not increase the number of credits.

Other Housing Provisions

The one area of the act that received considerable attention was the issue of whether to restrict large investors, including private equity, from owning single-family rental housing. Allowing more investment and capital into the rental market will lower rents but may make homeownership more expensive as it shifts supply away from that part of the market. The act prohibits investors holding more than 350 properties from buying more existing houses, although they can buy newly constructed houses. In some markets where large investors have bought a large share of the rental housing, such as Atlanta, this provision may tilt the market away from rental and toward homeownership over time. 

A Small Step Forward with Perhaps More to Come?

The 21^st Century ROAD to Housing Act is perhaps best considered an on-ramp to the highway to more affordable housing. It showed that Congress can create a bipartisan agreement to address issues of national priority. The short-run effects will be modest at best. It did little to reduce costs, and the regulatory changes and studies of best practices will take time. The technical provision that removed the outdated chassis requirement on manufactured housing is the provision that will have the biggest short-run effect. The act provides no new housing subsidies, when 20 million American households spend over half their income on housing.

But in the longer term, the act may accelerate the change occurring at the state and local levels to make it easier and less costly to build new houses, especially smaller houses for first-time homebuyers. And many in the housing community are now encouraged and preparing for a second round of reforms in 2027.

What Truman said when he signed the 1948 Housing Act could very well apply to this act 78 years later:

• "Because the bill which was passed will be of some help in meeting the critical housing shortage, I am giving it my approval; but the people of this country should understand clearly that it falls far short of the legislation which could and should have been enacted."

About the Author

Edward L. Golding

Non-resident Fellow, Urban Institute

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Edward Golding is a nonresident fellow at the Urban Institute. From 2019 to 2025, he was the executive director and senior lecturer at the Golub Center for Finance and Policy at MIT. Golding headed the Federal Housing Administration (FHA) from 2015 to 2017. Before FHA, he was an executive at Freddie Mac. Golding has taught at the Columbia Business School, the Wharton School of the University of Pennsylvania, Princeton University, and the University of Florida.

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• Authors’ Disclosures: The authors report no conflicts of interest. 
• The views expressed in this article are those of the authors and do not necessarily reflect the views of the MIT Golub Center for Finance and Policy, MIT Sloan, or the Massachusetts Institute of Technology.

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