By Kemi Osukoya
ECONOMIC POLICY
WASHINGTON D.C.—In a rare moment of bipartisan consensus in a deeply polarized Congress, the U.S. Senate on Thursday approved sweeping legislation aimed at tackling one of the country’s most persistent economic challenges: housing affordability.
The 21st Century ROAD to Housing Act, sponsored by Sen. Tim Scott-S.C., the Republican chair of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and the Democrat ranking committee member Sen. Elizabeth Warren of Mass, passed with overwhelming support, underscoring the growing urgency in Washington over a housing shortage that economists say could have economic consequences beyond the U.S. domestic property market.
The bill seeks to boost housing construction, expand financing for affordable developments and curb the growing presence of institutional investors in the U.S. single-family housing market.
Economists estimate the U.S. faces an estimated shortfall of at least five million homes, a deficit that has pushed rents and home prices sharply higher and drawn increasing concern from policymakers, investors and central bankers.
One of the bill’s most contentious provisions caps large investment firms at 350 single-family homes, with some properties required to be sold after seven years, part of the attempt to slow the expansion of Wall Street-backed landlords in suburban housing markets. Industry groups, including the National Association of Home Builders expressed concerns that this provision undermines the production of purpose-built single-family rental housing, which typically serves families seeking rental housing with three or more bedrooms as well as limit investments in such housings.
The White House signaled strong support for the legislation “as is.”
President Donald Trump, a former New York real estate developer, has made housing affordability a central part of his economic agenda as rising costs squeeze middle-class households.
“President Trump has been laser-focused on making housing more affordable and will not stop fighting until the American Dream of homeownership is within reach for every American,” White House spokesman David Ingle told Africa Bazaar, adding that the president plans to sign additional executive orders on housing.
The administration has already taken steps aimed at easing pressure in the housing market, including an executive order restricting large institutional purchases of single-family homes and directing mortgage agencies Fannie Mae and Freddie Mac to purchase up to $200 billion in mortgage-backed securities to help lower borrowing costs.
During his recent State of the Union address to Congress, Trump also urged lawmakers to pass legislation preventing large investment firms from acquiring thousands of homes in residential communities.
Beyond investor limits, the bill seeks to accelerate construction by cutting federal red tape that developers say can delay projects for months or even years. It streamlines inspection requirements at the U.S. Department of Housing and Urban Development and directs HUD to coordinate environmental reviews with the U.S. Department of Agriculture for certain projects, particularly in rural areas.
As part of efforts to boost housing constructions, the bill further expands federal financing for affordable housing that promotes modern construction methods, including factory-built and manufactured homes, aimed at lowering building costs and accelerating development.
Analysts say while the bill stops short of addressing one of the widely seen biggest barriers to housing development—local zoning rules, economists say it represents one of the most significant federal housing initiatives in years.
The U.S. housing market is closely tied to global finance. Housing costs are one of the largest components of inflation, and rising rents feed directly into the “shelter” category tracked by the Federal Reserve when setting interest rates.
That dynamic has fueled tensions between the White House and Federal Reserve chair Jay Powell, as the administration argues higher borrowing costs are pushing mortgages beyond the reach of many Americans.
Mortgages, such as Fannie Mae and Freddie Mac, are routinely bundled into securities and sold to investors worldwide, leaving banks, pension funds and asset managers that hold mortgage-backed assets in their portfolios globally exposed to the health of the U.S. housing market.
If the U.S. housing market weakens, economists say those assets can lose value and create ripple effects throughout global financial markets, while demographic shifts in housing activity can influence broader economic growth in the world’s largest economy.
Home construction also drives demand for materials ranging from lumber and steel to appliances and furniture, while rising home values often encourage consumer spending.
When American households spend less because housing costs rise or construction slows, the effects can reverberate through global trade.
While much of the current housing deficit dates back to the aftermath of the 2008 Global Financial Crisis, when residential construction collapsed and remained subdued for much of the following decade, residential apartments building have slowed since its 1970s and 80s boom. Demographic shifts have also since intensified demand as millennials, now the largest adult generation in the US — enter peak home-buying years, while many existing homeowners remain reluctant to sell after locking in historically low mortgage rates during the pandemic.
Local planning restrictions, in cities like New York City, Los Angeles and San Francisco have also constrained development in some of the country’s most expensive housing markets and fueled housing instabilities and homelessness.
Mayors across the nation, including the current NYC Mayor Zohran Mamdani, a millennial, have made housing affordability a focal point of their economic policy agenda and are doing everything they can to increase supply and support affordability. But they cannot solve this challenge alone without a federal partner, said United States Conference of Mayors current President and Oklahoma City Mayor David Holt.
Last month, Mayor Mamdani took the initiative to seek federal help when he visited the White House for a Oval Office meeting with the President to discuss ways to work together to tackle the housing affordability issue in the New York city, which is also the President’s native hometown.
Shortly after their Oval Office meeting, the Mamdani Administration launched a series of programs to accelerate affordable housing in the city, including an expedited review of city-owned land use and public review of affordable housing proposals in 12 community districts.
“Treating the housing crisis with the urgency it demands mean moving at the speed of need…We are using every tool available to build affordable housing projects faster, so working people can afford to stay in the city they call home,” Mayor Mamdani said in a statement.
In Los Angeles, Mayor Karen Bass is working with real estate developers and partners to tackle the city’s housing shortage ahead of the city hosting the summer Olympics Games in 2028.
In a statement on USCM’s site, Holt said Congress took a significant step forward in showing its seriousness about tackling housing affordability crisis and expand housing opportunities across the country.
“America’s mayors commend the Senate for passing the bipartisan 21st Century ROAD to Housing Act. We continue to be grateful that both the Senate and the House are working to address this critical issue that is of such great concern to all Americans,” noting that the midterm elections will be decided on “affordability and no cost is greater in a family budget than housing. This bill specifically includes critical reforms and tools that will expand housing opportunities for all Americans. We encourage lawmakers to continue working together to build on this bipartisan momentum and deliver a final bill to the President’s desk.”
Economists warn that without sustained increases in construction, the gap between housing supply and demand could widen further over the coming decade.
Supporters of the Senate legislation acknowledge the bill alone will not close the housing gap.
Local zoning rules remain largely outside federal control, and housing demand continues to outpace construction in many metropolitan areas.
Still, analysts say the 21st Century ROAD to Housing Act could modestly expand housing supply, improve financing for affordable housing projects and limit institutional investor dominance in parts of the single-family market.
