The 21^st Century ROAD to Housing Act, Congress’ marquee bipartisan housing bill, became law on July 11 with some welcome deregulatory reforms. But it also significantly expands the federal government’s role in housing policy, a domain that should largely be left to state and local governments.

 The most notable deregulatory measure in the bill removes the requirement from the Department of Housing and Urban Development (HUD) mandating that manufactured housing be built on a permanent steel chassis. This mandate has increased costs for manufactured housing, limited where such housing can be located, and impeded innovation in off-site housing production. By repealing this requirement, Congress has made it easier and more cost-effective to build manufactured housing, reducing housing costs for Americans.

Additionally, the 21^st Century ROAD to Housing Act reduces and streamlines federal environmental permitting requirements for many federally funded affordable housing projects. Environmental permitting delays add significant time and costs to numerous federally funded or federally involved projects, including housing developments. National Environmental Policy Act (NEPA) permitting requirements and delays are an impediment to energy projects across the country, and Americans for Prosperity (AFP) has long called for reforms. Streamlining of permitting for low-impact, federally funded housing projects is a welcome change.

However, the 21^st Century ROAD to Housing Act also contains numerous new or expanded government programs that increase government intervention in housing. The bill creates over a dozen new programs, including a grant program for single-stair apartment buildings, an Innovation Fund with grants for reforming zoning laws and permitting requirements, and a new grant program for commercial-to-residential affordable housing conversions. These efforts only increase federal spending and intervention, encroaching on policies already spearheaded by state and local governments across the country. States and localities nationwide have already begun reforming zoning and land-use laws, legalizing single-stair apartment buildings, and allowing commercial-to-residential conversions, among other reforms. Increasing federal intervention in state and local areas reduces federalism and crowds out bottom-up state, local, and private-sector solutions.

Moreover, the bill restricts investor ownership of single-family homes. A previous version of the 21^st Century ROAD to Housing Act would have prohibited investors from owning more than 350 single-family homes, townhomes, or duplexes nationwide. Certain “excepted purchases,” including build-to-rent and renovate-to-rent homes, and homeownership program rentals, would have been required to be sold and divested from within 7 years if above the 350-unit threshold. The original restrictions would have likely reduced the housing supply, as developers would build fewer rental properties, and the forced sale provision was likely unconstitutional.

The final bill, therefore, significantly revised the investor ownership provision. As Mark Grobmyer, John Cagigas, and Christian Villicana detail in the National Law Review, the final version eliminates the 7-year forced sale provision, applies to future acquisitions, and largely exempts build-to-rent, renovate-to-rent, homeownership programs, sales between large investors, and a few other housing types. These changes address some of the constitutionality concerns raised by the earlier version and would reduce the provision’s impact on housing supply. However, the bill includes significant compliance costs, including annual reporting to HUD and compliance with a new HUD complaint and reporting program. While an improvement over the initial ban, the narrowed prohibition would still infringe on property rights, increase costs for smaller investors subject to the ban, and could create issues for the millions of Americans renting investor-owned homes who cannot afford or may not want to buy property.

There are, however, other deregulatory reforms the federal government can pursue in the future to increase the housing supply. The federal government currently owns over one quarter of all the land in the United States, including 50 percent of land in the American West. While this includes military bases and national park land, much of the federally owned land is vacant. The federal government should sell off vacant, unused federal land to state or local governments or to private developers to allow for more housing construction, while preserving federally owned national parks, forests, military installations, and mining and grazing rights.

In 2023, Sen. Mike Lee of Utah introduced the HOUSES Act, which would have allowed state and local governments to request that the Department of the Interior sell them certain lands, a reform that could add over 2.7 million homes out West. Last year, Sen. Lee and Rep. Mark Amodei of Nevada each introduced separate amendments to the One Big Beautiful Bill Act that would have required the Secretary of the Interior to sell off more than 1 million acres of federally owned land for housing development (representing under 1 percent of all federally owned land), although neither amendment was ultimately included in the final bill.

Housing costs have skyrocketed in recent years, with home prices increasing by over 150% since 2012. The median single-family home now costs nearly five times the median income. The White House estimates a nationwide housing shortage of 10 million homes. These factors have catapulted housing to a top issue for Americans nationwide.

However, housing is primarily a state and local issue. AFP chapters in states across the country have helped pass transformative and meaningful zoning, land-use, and permitting reforms in recent years. AFP’s Roadmap for Housing Policy Reform report outlines numerous reform options for state and local governments to implement to increase property rights and reduce housing shortages.