New housing law takes aim at supply, but buyers may wait for relief

A new federal housing law is aimed at making homes easier to build and finance at a time when buyers are squeezed by high prices and mortgage rates above 6.5%. For everyday investors and homeowners, the law could shape future supply, local home values and competition from large rental-home owners, though housing experts say the effects will take time.

The 21st Century ROAD to Housing Act became law Saturday after President Donald Trump did not sign or veto it within the required period, according to CNBC. Congress passed the bipartisan measure on June 23.

The law combines a range of housing policies designed to encourage new construction, widen access to home financing and limit some purchases by large institutional investors. Those investors are companies or funds that buy homes as assets, often to rent them out.

Bill Owens, chairman of the National Association of Home Builders, said in a statement after congressional passage that the measure would support more housing supply by reducing regulatory barriers and encouraging local governments to change zoning and land-use rules that have held back building.

Affordability pressure remains high

The law arrives after a sharp rise in home prices. The median price of an existing U.S. home was $440,600 in June, up 49.2% from June 2020, according to the National Association of Realtors.

The U.S. also faces an estimated housing shortage of about 4 million homes, according to Realtor.com. A supply deficit means there are fewer homes available than the market needs, which can keep prices elevated when demand is strong.

Selma Hepp, chief economist at real estate data company Cotality, said the law targets major cost drivers including land-use limits, slow permitting, financing barriers and regulation. She also said buyers should not expect quick relief because development takes time and the benefits are likely to appear gradually.

Large investor purchases face new limits

One consumer-facing provision bars large institutional investors that own at least 350 single-family homes from buying more single-family homes, with exceptions. Those carveouts include some build-to-rent and renovate-to-rent projects, along with programs designed to help renters build credit and eventually buy homes.

Supporters argue the restriction could reduce competition from large corporate buyers in some markets, especially in Sun Belt areas where such investors have been blamed for adding pressure to prices. CNBC reported that economists say institutional investor buying remains relatively limited even in many of those markets.

Manufactured homes and small mortgages

The law also changes the federal definition of a manufactured home to include houses built without a permanent steel chassis. A chassis is the metal frame under manufactured and mobile homes that allows them to be moved by tow truck.

The Lincoln Institute of Land Policy has said few homes are moved after placement. Removing the chassis requirement could cut the cost of a manufactured home by $5,000 to $10,000, according to the Niskanen Center, a nonpartisan think tank.

Another provision creates a four-year pilot program for small mortgages, defined as loans under $100,000. Some lenders avoid those loans because compliance costs can make them less attractive. The pilot includes subsidies for lenders that originate smaller mortgages and grants to borrowers for down payments and closing costs.

John Walkup, co-founder of New York City real estate pricing intelligence platform UrbanDigs, said the legislation may help housing supply at the margin, though not immediately. He said supply depends on local factors including construction costs, labor availability, land prices, infrastructure limits, zoning rules and community opposition.

The law took an unusual path to enactment. Trump had canceled a June 24 signing ceremony and said he would not sign the housing measure until Congress passed the SAVE America Act, a Republican-backed election bill requiring proof of U.S. citizenship to register to vote, according to CNBC. House Speaker Mike Johnson, R-La., sent the housing bill to the White House on June 29, and it became law after 10 calendar days excluding Sundays without presidential action.

This story draws on original reporting from CNBC.