How Will the 21st Century ROAD to Housing Act Affect Housing Supply? Part III

Via Wikipedia.

This is my third and final essay looking at the 21st Century ROAD to Housing Act, and how it’s likely to affect housing supply. As I’ve noted in my previous two essays, this is a sprawling piece of legislation, with 59 sections spread across 12 different “titles.” So far we’ve looked at Titles I, II, and III, which together contain 24 individual sections. In this post, I’ll look at the remaining nine titles of the package. There are a lot of sections (35!), but many of them don’t apply to housing at all, and as with earlier titles the major potential impacts are concentrated in a small number of sections (chiefly sections 501, 502, 1001, and possibly 504).

Title IV — Accessing the American Dream

This title contains five sections, and while all of them are related to housing in some way, none of them are likely to have a major impact on housing supply.

Section 401 — Creating Incentives for Small-dollar Loan Originators and Section 402 — Small-dollar Mortgage Points and Fees. These two provisions require the Consumer Financial Protection Bureau (CFPB) to study how mortgage loan compensation practices (401) and points and fee thresholds (402) affect the availability of small-dollar mortgages. As we noted when we looked at section 105, small-dollar mortgage availability is a real problem, but all this requires is for the CFPB to study the problem. Conceivably this section could have some impact down the line if these studies inspire further action, but on its own this does nothing except create some reports.

Section 403 — Appraisal Industry Improvement Act. This section loosens various restrictions on appraisers (such as what credentials FHA appraisers need to have), changes some education requirements, and provides some grants for training more appraisers. These changes might help expand the effective size of the appraiser workforce, making it easier or cheaper to get an appraisal (and potentially reducing disparities in home valuation), but it’s not something likely to have any real impact on housing supply.

Section 404 — Helping More Families Save Act. This section modifies the Family Self-Sufficiency (FSS) program, a sort of savings program administered by HUD. When a family is living in HUD-subsidized housing, they pay 30% of their income in rent, with HUD covering the balance. So if rent for an apartment is $1,500 a month, but 30% of a family’s income is $800 a month, HUD will cover the remaining $700.

Normally, if the family’s income increases, they will still pay 30% of their income, so any rise in income also increases rent. With the FSS program, if a family’s income increases, the extra money paid in rent gets put in an account, which then gets returned to the family after several years if they meet certain requirements (such as being employed). This change creates a pilot for a modified version of this program that removes some of these requirements, and makes the program “opt-out” rather than “opt-in.” So this is in essence an experiment to test how a modified version of this savings program might work, but not something that will have any sort of housing supply impact.

Section 405 — Choice in Affordable Housing Act. This section modifies inspection requirements for federally subsidized housing, basically eliminating the inspection required before a family moves into a unit if it has been inspected in the previous 12 months as part of certain other federal housing programs. It also allows new landlords to request advance inspections. This eliminates some of the hoops that need to be jumped through when a family moves into a subsidized unit, but it’s not something that will have any housing supply impact.

Title V — Program Reform

This title contains five sections, all of which modify existing housing programs in some way. Out of Titles IV through XII, this is the only one that has some provisions that might meaningfully increase housing supply.

Section 501 — HOME Investment Partnerships Reauthorization and Reform Act. This section reauthorizes the HOME Investment Partnerships program and makes some tweaks to how it works. HOME is sort of like Community Development Block Grants (CDBG); it’s a big pot of money ($1.25 billion in 2025) that HUD gives to various jurisdictions to use on various projects. The difference is that while CDBG has historically not been used to build new housing (until changes in this bill), HOME has specifically been funding for affordable housing. As I understand it, HOME funding often gets used to bridge the funding gap on LIHTC projects.

The reauthorization is interesting: technically HOME’s authorization expired in 1994, but it has had funds appropriated every year since then anyway, so the actual impact of the reauthorization is not amazingly clear to me.

The biggest tweak in how it works now is the addition of some NEPA exclusions. Infill construction and projects of up to 15 units (up from four units previously) will now be exempt from NEPA review. Other tweaks include allowing HOME money to be used for certain non-housing things (such as sewers or sidewalks near HOME projects), changing the income requirements for subsidized tenants, and so on.

My takeaway is basically the same as the NEPA modifications in section 206 of Title II — a nice bit of streamlining that probably does not move housing supply much:

It doesn’t change the amount of funding for these projects, but it could make some of that funding stretch slightly farther if folks don’t need to take the time and effort to do an environmental review. And it also might just make folks more willing to do these sorts of projects. But the bigger impact is probably just significantly reducing the permitting difficulties for HUD-funded housing projects, making it easier to build them.

Section 502 — Rural Housing Service Reform Act. This section makes a bunch of tweaks to the USDA’s Rural Housing Service program. As we noted previously, the USDA has historically had significant involvement in rural housing construction and since 1950 has funded the “construction, purchase, or repair of over 5.5 million rural housing units.”

The list of changes section 502 makes to this program is long and complex (this section goes on for 10 pages of text in the act), but as far as I can tell the most consequential change is to how some USDA-subsidized rural rental housing is funded. These units were subsidized in two ways. First, the USDA would provide a subsidized loan for the actual construction of the rental property (this is called a Section 514 or Section 515 loan, depending on the type of housing). Second, the USDA would cover the difference between the subsidized rent (typically 30% of a tenant’s income) and the full rent of the unit.

Historically, these two sources of funding were coupled: when the mortgage was paid off, the USDA would stop subsidizing rents. Section 502 of the ROAD to Housing Act makes it possible to decouple these funding streams: once the mortgage ends, the rent subsidy can remain in place. (There has been a pilot program for this since 2024, but it was initially limited to 1000 units.)

There’s a fairly large pool of units that this change will apply to: the USDA has around 400,000 apartment units; 80% of them rely on rent subsidies; and on the order of 137,000 units will have mature mortgages by 2034. So this change will keep a lot of subsidized housing units around.

For most of these units, “keeping them around” means “keeping them subsidized,” not “keeping them in the housing stock.” In the absence of this legislation, for most of these units the owners would probably either refinance the mortgage before it expires (thus keeping the rent subsidies) or convert the units to unsubsidized housing. But some fraction of them might have their mortgage expire, lose their subsidized renters, and then stop being maintained, so this change could potentially keep a chunk of these USDA housing units from falling out of the housing stock.

Section 503 — Incentivizing Local Solutions to Homelessness. This section modifies a federal homelessness program, Emergency Solutions Grants (ESG), which is designed “to assist people with quickly regaining stability in permanent housing after experiencing a housing crisis and/or homelessness.” ESG gives jurisdictions money for various homeless programs/efforts, but has constraints on how much money can be spent on certain things. This change allows someone to request a waiver for some of those constraints, specifically “emergency shelter activities and street outreach.” Nothing here will affect housing supply at all, unless you have a very expansive definition of housing that includes homeless shelter beds.

Section 504 — Reforming Disaster Recovery Act. This section authorizes the CDBG Disaster Recovery program for three years and makes some tweaks to it. The disaster recovery program, as the name suggests, is a chunk of CDBG funding allocated for disaster recovery. Until now this program has operated somewhat unofficially: it’s just been money allocated via the CDBG mechanism that’s specifically earmarked for disaster relief. This change makes tweaks to how the program works, which will do things like allowing funds to get out the door more quickly after disasters and allow for better long-term planning about disaster recovery. The main impact on housing is probably letting damaged or destroyed housing get rebuilt somewhat more quickly than it might otherwise be following a disaster, but it’s hard to estimate what the magnitude of that might be.

Section 505 — New Moving to Work Cohort. This section authorizes a new Moving to Work cohort. Moving to Work is a program created in 1996 that gives public housing authorities more flexibility for things like the way they use federal funding and the way they calculate subsidized rents. It’s designed to “[u]se Federal dollars more efficiently, help residents find employment and become self-sufficient, and increase housing choices for low-income families.” As of 2020, there were 39 agencies in the program. This section authorizes another 25. There’s probably not much impact on housing supply here; this basically just gives more flexibility for the use of existing federal money.

Title VI — Veterans and Housing

This is a short title aimed at various veteran housing issues, none of which are likely to have much impact on housing supply.

Section 601 — Military Service Question. This section adds a disclosure to the standard residential mortgage application form (the Uniform Residential Loan Application) that veterans might be eligible for a VA home loan. This is conceivably a large amount of loans — one VA lender estimated that 58,000 possible VA home loans went “untapped” in 2024 — but it doesn’t really have any impact on housing supply. (Since a VA home loan is effectively a demand subsidy, if anything this would tend to push house prices up.)

Section 602 — Housing Unhoused Disabled Veterans Act. This section modifies HUD’s Veterans Affairs Supportive Housing program, which is a program that provides housing vouchers for veterans. It removes certain disability benefits from the income calculation to determine if someone qualifies for the program.

Section 603 — Veterans Affairs Loan Informed Disclosure (VALID) Act. This section changes mortgage disclosure rules to make it easier to compare VA loans to other types of loans.

Title VII — Oversight and Accountability

This is another short title, containing four sections that mostly modify various reporting requirements. Nothing here is likely to affect housing supply.

Section 701 — Requiring Annual Testimony and Oversight from Housing Regulators. This section requires HUD to testify before Congress annually.

Section 702 — FHA Reporting Requirements on Safety and Soundness. This section requires HUD to provide monthly reports on the FHA insurance fund’s capital ratio.

Section 703 — United States Interagency Council on Homelessness Oversight. This section requires the United States Interagency Council on Homelessness (USICH), whose goal is to “coordinate the federal response to homelessness,” to provide an annual progress report.

Section 704 — Appraisal Modernization Act. The only part of this title that’s not purely about reporting requirements, this section requires lenders for federally backed mortgages to have procedures if a consumer wants a second appraisal or a reconsideration of a previous appraisal. It also requires the GAO to report on the feasibility of a public appraisal database.

Title VIII — Accountability, Coordination, Studies, and Reporting

This is another short title that’s focused on making it easier for various government agencies to coordinate. Nothing in this title will likely affect housing supply at all.

Section 801 — HUD-USDA-VA Interagency Coordination Act. This section directs HUD, the VA, and the USDA to look for ways to coordinate their various housing programs.

Section 802 — Streamlining Rural Housing Act. This section directs HUD and the USDA to coordinate their environmental review processes. Another nice, if very minor, bit of environmental streamlining, but nothing that will move housing supply.

Section 803 — Improving Self-Sufficiency of Families in HUD-Subsidized Housing. This section directs HUD to study work requirements for public housing authorities participating in Moving to Work.

Section 804 — GAO Studies. This section requires the GAO to study various things, such as barriers to affordable housing access, housing units located near EPA “National Priorities List,” and “challenges relating to heirs property.”

Section 805 — Improving Public Housing Agency Accountability. This section basically creates various reporting requirements for certain public housing agencies.

Title IX — Strengthening Community Banks’ Role in Housing

This is a longer title — nine sections — that’s not about housing at all. Every section in this title is about various banking regulations, most of which are about helping out small, regional banks. Since this title doesn’t look at housing at all, I’m skipping it.

Title X — Home-Ownership for Main Street America

This title just has a single section, 1001 — Homes Are for People, Not Corporations, which restricts the purchase of single-family homes by large institutional investors (companies that directly or indirectly own 350 homes or more). This is a policy that’s become very popular on the right and the left, and there’s some evidence that these sorts of institutional purchases might push up home prices.

However, in practice this section probably won’t actually restrict these sorts of purchases all that much. This section includes a number of exceptions that allow an institutional investor to purchase single-family homes, some of which are likely to be relatively easy to comply with. The easiest is probably a carveout that allows these purchases if an investor has a “program to boost homeownership,” the requirements of which are modest:

• The investor needs to report on rental payments to consumer reporting agencies.

• The investor needs to give renters the first right of refusal and a 30-day window before they sell the home.

• The investor may provide “meaningful financial support,” including price concessions, for renters who want to purchase the house from the investor.

This last requirement could potentially be more burdensome, but the word “may” suggests that it will be optional or only required in certain circumstances. Assuming that compliance costs are not that high, this section probably won’t actually influence investor demand, and thus housing supply, in any meaningful way.

(This section previously would have sharply discouraged build-to-rent housing from large investors, but in the final version build-to-rent was added as an exception.)

Title XI — Central Bank Digital Currency

This title has just one provision, which temporarily “prohibits the Federal Reserve from establishing a digital currency.” No housing impact.

Title XII — Miscellaneous

This title is just administrative clarifications: one section here clarifies that no funding is authorized, and another clarifies that if one section of the act is found invalid, it doesn’t invalidate any other sections.

Conclusion

These nine titles contain most of the sections of the legislation (35 of the 59 total), and most of the actual legislative text. But most of the changes it makes seem likely to be either minor, unrelated to housing supply, or both. The sections with the biggest potential impact on housing are probably 501 (HOME Investment Partnerships reauthorization and NEPA exclusions), 502 (USDA rural housing funding), 1001 (ban on institutional investors buying single-family homes), and possibly 504 (CDBG disaster relief changes which might allow funds to get out the door quicker).

Once again, for most of these the question comes down to incentives and how strongly the various sections of the act modify them: for 501, I suspect the NEPA exclusions for HOME aren’t a strong enough incentive to change much about how many of these projects get built, for 1001 I think that the “ban” on institutional investors owning single-family homes has enough exceptions that the incentive for institutional investors to purchase them isn’t weakened all that much. With 502, the incentive seems stronger to me — keeping rent subsidies might plausibly make it worth keeping housing units around that might otherwise not be maintained — but it’s not easy to tell.