US housing law targets 4M home deficit but delays relief

The 21st Century ROAD to Housing Act became US law on Saturday. President Donald Trump neither signed nor vetoed the bipartisan bill within the required timeframe, allowing it to take effect automatically.

The legislation arrives as the US housing market remains severely squeezed. The median existing home price reached $440,600 in June, a 49.2% increase from June 2020, while 30-year fixed mortgage rates hover above 6.5%. Realtor.com estimates a national housing supply deficit of roughly 4 million homes.

To address this shortfall, the law targets regulatory bottlenecks. "This bill directly targets some of the biggest drivers of housing costs: land-use restrictions, permitting delays, financing constraints and regulatory hurdles," said Selma Hepp, chief economist at Cotality. Bill Owens, chairman of the National Association of Home Builders, said the law "will help expand the nation's housing supply by reducing regulatory barriers and encouraging local governments to reform zoning and land-use policies that have limited home building."

For institutional capital markets, a key provision prohibits large investors owning 350 or more single-family homes from buying additional properties. While economists note institutional buying remains relatively light even in targeted Sun Belt markets, the ban includes exceptions for build-to-rent and renovate-to-rent projects, as well as rent-to-own credit programs.

The law also adjusts the federal definition of a "manufactured home" to eliminate the permanent steel chassis requirement. According to the Niskanen Center, this could lower manufactured home costs by $5,000 to $10,000. Additionally, a four-year pilot program will subsidize lenders to originate small mortgages under $100,000, a segment often avoided due to compliance costs, while providing borrower grants.

Despite the breadth of these measures, market professionals caution against expecting a rapid supply response. "Unfortunately, homebuyers should not expect immediate relief," Hepp said, adding that "housing development takes time and many of the benefits would likely materialize gradually rather than overnight."

John Walkup, co-founder of real estate intelligence platform UrbanDigs, noted the legislation will likely help supply "more at the margin, and certainly not overnight." "It's a complicated calculation that ropes in construction costs, labor availability, land prices, infrastructure constraints, local zoning rules, and community opposition that determines how much housing gets built," he said. "Legislation can help create incentives and remove obstacles, but it can't single-handedly solve a housing shortage that has been building for years."