New Housing Law Could Reshape Construction – Realtor.com Report Identifies Key Cities

The 21st Century ROAD to Housing Act, recently signed into law in the United States, seeks to streamline the construction of affordable homes by reducing regulatory hurdles. A new report by Realtor.com examines the potential impact of these changes on local housing policies nationwide.

The bipartisan legislation addresses the housing crisis through multiple avenues. It allows for the use of pre-approved home designs to expedite the permitting process, strengthens community and rural banking with a focus on local lending, and modernizes programs within the Department of Housing and Urban Development (HUD).

A notable change involves a HUD program that provides federal block grants to help communities increase affordable housing stock. Historically, these funds have been allocated towards infrastructure, economic development, and public services. The new law permits these funds to be directly used for building new affordable housing. Cities that increase their housing supply become eligible for larger grant allocations, while those that do not may see their awards reduced.

Realtor.com found that while large cities like New York, Chicago, and Los Angeles receive substantial grants, the impact of the new law may be limited due to the grants constituting a small fraction of their overall budgets. In contrast, smaller cities like Camden, New Jersey, and Saginaw, Michigan, may see a more significant effect as these federal funds represent a larger proportion of their local budgets. Cities such as Milwaukee, Detroit, and Cleveland, where new home construction is minimal and CDBG funds are a relatively important part of the city budget, are identified as potentially benefiting most.

Joel Berner, Senior Economist at Realtor.com, stated that targeting incentives toward areas with the least active homebuilding could unlock development where it is most needed. He noted that the key challenge lies in whether cities can reduce regulatory barriers and facilitate construction. Berner suggested that Congress may need to increase financial stakes if the program is to drive broader change.