New housing law targets affordability — what it means for homebuyers and sellers

Bipartisan legislation intended to increase the U.S. housing supply and improve affordability is now law — but experts say homebuyers and sellers shouldn't expect fast relief.

The 21st Century ROAD to Housing Act automatically became law on Saturday after President Donald Trump neither signed it nor vetoed it within a set timeframe. The legislation combines dozens of housing measures aimed at encouraging home construction, expanding access to financing and restricting purchases by large institutional investors.

The legislation "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," said Bill Owens, chairman of the National Association of Home Builders, in a statement after the measure cleared Congress on June 23.

The new law arrives as housing affordability remains strained. Home prices are near record highs and 30-year fixed mortgage rates continue to hover above 6.5%.

The median price of an existing home in the U.S. reached $440,600 in June, up 49.2% from June 2020, according to data from the National Association of Realtors. There's also an estimated housing supply deficit of about 4 million homes, according to Realtor.com.

"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, a real estate data company.

"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."

Among the new law's many technical and policy changes, several provisions are likely to matter most to consumers.

A key provision would prohibit large institutional investors that own at least 350 single-family homes from purchasing additional single-family homes, subject to several exceptions. Those exceptions include certain build-to-rent and renovate-to-rent projects, as well as programs that help renters build credit and eventually purchase homes.

Supporters say the measure could help limit competition from large corporate buyers in some housing markets, particularly in parts of the Sun Belt where institutional investors have been blamed for contributing to higher home prices. Economists, however, say institutional investors' purchase activity remains relatively light even in many of those markets.

Another provision aims to reduce barriers to manufactured housing and encourage broader use of factory-built homes, which are often among the least expensive paths to homeownership.

Specifically, the bill expands the federal definition of "manufactured home" to include houses that are built without a permanent steel chassis, the metal frame under manufactured and mobile homes that enabled easy transportation with a tow truck. However, few homes are moved after being placed, according to the Lincoln Institute of Land Policy.

Among other benefits, the chassis requirement could reduce the cost of a manufactured home by $5,000 to $10,000, which could put homeownership within reach for more families, according to the Niskanen Center, a nonpartisan think tank.

The legislation also creates a four-year pilot program to expand the availability of small mortgages — those under $100,000 — which some lenders avoid due to compliance costs. Supporters say improving access to smaller loans could help buyers in lower-cost markets and those purchasing less expensive homes.Â

The pilot program includes paying lenders a subsidy to originate those smaller mortgages and providing borrower grants for down payments and closing costs.

Overall, the legislation may help the housing supply "more at the margin, and certainly not overnight," said John Walkup, co-founder at UrbanDigs, a New York City real estate pricing intelligence platform.

Housing supply is ultimately a local issue, Walkup said.

"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."

Trump had canceled a June 24 signing ceremony for the bipartisan bill hours before the event, saying he would not sign it until Congress passes the SAVE America Act, a Republican-backed election measure that would require proof of U.S. citizenship to register to vote. The move caught lawmakers in both parties off guard and delayed enactment of the legislation.

House Speaker Mike Johnson, R-La., sent the housing bill to the White House on June 29, starting the clock for the president to take action. After 10 calendar days — excluding Sundays — because Trump neither vetoed the bill nor signed it, the measure became law without his signature.