Housing News

Senate Passes Major Housing Bill. Here’s What It Could Mean for Homebuyers

A sweeping bipartisan housing bill may help address the nation’s housing shortage is one step away from becoming law.

The Senate voted 85-5 to approve the 21st Century ROAD to Housing Act, sending the legislation back to the House of Representatives this week before it can head to President Donald Trump’s desk.

The bill includes 45 provisions aimed at encouraging homebuilding, modernizing federal housing programs, expanding access to mortgage financing, and easing some of the regulatory barriers that supporters of the bill say have made housing more expensive.

The legislation is among the most significant federal housing measures in decades. But prospective homebuyers should temper expectations. Rather than delivering immediate relief, the bill is designed to lay the groundwork for a healthier housing market over the long-term by increasing the number of homes available and expanding homeownership opportunities.

“Housing affordability starts with supply, and this bill makes meaningful progress toward building more homes and lowering costs for American families,” House Financial Services Committee Chairman Rep. French Hill, R-Ark., said in a statement following the Senate vote.

If the bill is signed into law, here’s what homebuyers need to know.

More homes on the market could eventually improve affordability

Housing economists have long argued that the U.S. has not built enough homes to keep pace with demand, contributing to years of rising prices.

Much of the legislation is designed to address that shortage by streamlining development, strengthening federal housing programs, making it easier to build new homes, and expanding support for manufactured housing.

“America’s housing shortage and affordability challenges demand action,” said Shannon McGahn, executive vice president and chief advocacy officer of the National Association of Realtors, in a statement.

“The cost of building a new home has increased dramatically, with regulatory costs alone adding more than $131,000 to the price of a new home today,” McGahn continued. “This legislation helps reduce barriers to building, modernize housing programs, and creates more opportunities for homeownership.”

However, even supporters acknowledge that the bill is not a quick fix.

“While the housing crisis is such that we need to be looking at all types of solutions, including the ones that appear in this bill, this action is not going to be enough to unlock significant amounts of new construction across the country,” said Edward G. Goetz, professor of urban and regional planning and director of the Center for Urban and Regional Affairs at the University of Minnesota. “Affordability is going to remain an issue for new homebuyers and for renters.”

Goetz noted that many of the regulations and rules that impact housing construction are set by state and local governments, meaning federal legislation alone cannot eliminate many of the barriers that slow development.

Still, over time, increasing housing supply could give buyers more choices and help ease price pressures in some markets.

The 21st Century ROAD to Housing Act may make it easier to get a mortgage

The legislation includes provisions that would expand access to affordable mortgage financing as more financial institutions may be able to offer home loans.

The bill is not expected to affect mortgage rates directly, which continue to be driven by inflation, Federal Reserve policy, and broader financial markets. Instead, supporters say its financing provisions could gradually improve access to mortgage credit as the housing market evolves.

The bill would also increase the U.S. Department of Housing and Urban Development’s multifamily loan limits for the first time since 2003. These are properties with multiple units.

Wall Street investors would not be able to buy as many single-family homes

One of the bill’s highest-profile provisions would place new limits on large institutional investors purchasing existing single-family homes. This is to make it easier for regular homebuyers, who plan to live in these properties, to compete with Wall Street-backed investors.

Several of the original restrictions were softened during negotiations after concerns from the build-to-rent industry that broader limits could discourage new housing construction.

Even so, many housing analysts note that institutional investors own only a relatively small share of the nation’s housing stock. That means the measure may have only a modest effect on affordability in many markets.

Manufactured housing receives new attention in the 21st Century ROAD to Housing Act

The legislation also includes provisions intended to modernize federal policies surrounding manufactured housing.

It may be easier for buyers to afford a manufactured home, particularly in rural communities and some higher-cost markets.

The bill seeks to reduce barriers to financing and development. Even if it becomes law, financing options will still vary depending on the lender, the loan program, the type of home, and whether the home is permanently attached to owned land.