A New Road to Affordable Housing?

The bipartisan 21st Century ROAD to Housing Act became law on July 11, 2026. The law seeks to address the nation’s historic housing supply shortage and affordability crisis by reducing regulatory barriers that slow construction and providing grants to states and local governments to encourage new development.

The law’s key provisions modernize permitting, zoning, and land-use requirements and encourage public and private investment in housing development. The law also expands funding options under the Community Development Block Grant Program and streamlines federal environmental reviews for certain small-scale housing projects. It also raises the public welfare investment limit for community banks to support affordable and low-income housing and, beginning 180 days after enactment, will prohibit large institutional investors from purchasing single-family homes, subject to exceptions.

The law responds to broad agreement that the United States faces a serious housing supply shortage. Although estimates vary, housing data suggests that the country faces a shortage of 4 to 5 million homes. Annual home construction fell sharply after the financial crisis began in 2007 and has not returned to the levels recorded in the preceding two decades.

The supply shortage drives the housing affordability crisis. U.S. home prices recently hit record highs and have outpaced national wage growth over the last decade. Rising interest rates have also strained housing affordability and pushed mortgage rates to their highest levels in 20 years. Higher borrowing costs burden first-time buyers, and owners who secured mortgages with lower rates may hesitate to sell. This “lock-in” effect exacerbates an already tight housing supply.

Policymakers have called for zoning reform to address the housing supply and affordability crisis. Local governments typically enact zoning rules that govern how private land may be used and developed. Many zoning rules prohibit multifamily housing. Researchers estimate that local zoning permits only single-family homes on roughly three-quarters of land in U.S. cities, limiting where developers may build denser housing.

Several states have reformed local zoning laws to address their role in the supply shortage. In 2019, Oregon became the first state to pass comprehensive legislation prohibiting single-family zoning in most cities. Early data suggests that multifamily housing permits in the state are on the rise compared with single-family permits. California has passed legislation that streamlines zoning approvals and allows duplexes and multifamily housing in areas previously reserved for single-family homes. In North Carolina, however, a bipartisan proposal to preempt local zoning laws and legalize duplexes, triplexes, and townhomes stalled after local governments opposed it.

In this week’s Saturday Seminar, scholars debate the effects of zoning laws on housing supply and affordability and offer ideas for reform.

• In a Vanderbilt Policy Accelerator white paper, Dave Uejio, Chief Operating Officer of Prosperity Now, argues that expanding housing supply requires more than loosening regulations and relying on private developers. Uejio acknowledges the value of zoning reform and other supply-side measures reflected in the 21st Century ROAD to Housing Act but argues that private capital alone cannot produce affordable housing at the scale or speed needed. Uejio proposes using existing federal institutions that finance housing and executive authority to expand community-owned housing, particularly community land trusts. By urging Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and state housing finance agencies to support community ownership, Uejio offers a way to increase supply while keeping homes affordable over time.
• In a University of Pennsylvania Law Review article, Vanderbilt Law School professors Christopher Serkin and Ganesh Sitaraman challenge the growing consensus that loosening zoning is the central solution to the housing affordability crisis. Serkin and Sitaraman argue that zoning reform can increase supply in some places but that treating deregulation as the primary policy objective overlooks the structural forces shaping housing markets. Serkin and Sitaraman propose a broader “post-neoliberal” framework in which the government actively shapes markets through an industrial policy for housing, public housing options, tax policy, and regulation. Their proposed industrial policy combines regulatory reform and robust public investment to lower construction costs and accelerate homebuilding, placing zoning reform within a much broader conception of housing-market policy.
• In a Texas Law Review article, Joshua Braver, a professor at the University of Wisconsin Law School, and Ilya Somin, a professor at George Mason University’s Antonin Scalia Law School, argue that exclusionary zoning laws are generally unconstitutional and offer strategies for challenging them. After tracing the history of zoning laws in the United States, Braver and Somin develop an originalist argument that the Takings Clause of the U.S. Constitution bars most exclusionary zoning laws. They argue that nonoriginalist methods of constitutional interpretation support the same conclusion. Braver and Somin argue that strategic litigation and judicial review could address the long-standing harms of exclusionary zoning, especially where powerful interests have thwarted democratic reform.
• In a Bipartisan Policy Center paper, Graham DiLorenzo and several coauthors at the Center present four case studies of local efforts to address housing affordability. Columbia, South Carolina, and Kansas City, Missouri use data-driven approaches to turn vacant lots into sites for housing and address homelessness, respectively. Manchester, New Hampshire, rewrote its zoning code to cut red tape and support duplexes, triplexes, and small apartment buildings, the DiLorenzo team notes. San Diego has targeted regulatory barriers with a streamlined, objective zoning standard that eases permitting and speed approvals. DiLorenzo and his coauthors contend that these efforts offer models for addressing housing supply and affordability issues.
• In a working paper for the International Inequalities Institute at the London School of Economics, Maximilian Buchholz, a professor at the University of California, Berkeley, and several coauthors argue that rising inequality, rather than housing regulation, primarily drives the nation’s affordability crisis. The Buchholz team explains that the “deregulationist” view attributes affordability problems to regulations that constrain housing supply. Even a large, deregulation-driven expansion in supply would take decades to generate widespread affordability in high-cost U.S. markets, Buchholz and his coauthors contend. The Buchholz team attributes declining affordability primarily to uneven demand growth driven by increasing interpersonal and interregional inequality.
• In an article published in the Housing Policy Debate, Anthony Damiano a Research Associate at the University of Minnesota, advocates “supply realism,” an approach that recognizes the need for new housing but rejects the idea that supply alone will make housing affordable. Damiano notes that although new high-end housing can moderate prices regionally, it may not benefit low-income renters and may increase nearby rents. Damiano calls for further research on how high-end housing supply affects subgroups within a market, rather than examining only the market as a whole. He encourages policymakers to adopt a broad range of housing policies, such as zoning reform, tenant protections, rent stabilization, and policies that preserve existing housing and support new subsidized housing.