Sweeping housing affordability bill becomes law, despite Trump’s delay. Here’s what it actually means for the housing market

By Samantha Delouya, CNN

(CNN) — The 21st Century Road to Housing Act, a bipartisan bill that aims to tackle housing affordability, officially became law early Saturday, despite a series of attempts by President Donald Trump to stall the legislation.

Its passage signals that lawmakers recognize the frustration many Americans feel about the high cost of housing. At a time of elevated mortgage rates and near-record high home prices, many feel locked out of homeownership or struggle with monthly rent payments.

Supporters of the law have touted it as the most comprehensive housing reform in at least three decades. White House press secretary Karoline Leavitt called the new law “one of the most significant pieces of housing affordability legislation in American History,” in a social media post last month.

But Trump, who had previously expressed support for the law, has since turned critical.

In a social media post on Friday, Trump said he refused to sign the bill in protest of the Senate’s failure to pass the SAVE America Act, a voter ID measure he has argued should be Congress’ top priority.

Last month, after the bill passed Congress, Trump also canceled a signing ceremony just two hours before it was scheduled to begin, later calling the bill a “big yawn.”

Regardless, the measure became law automatically on Saturday morning under the Constitution, since he did not veto it.

Trump’s last-minute criticism capped months of bipartisan negotiations on what would become the largest housing affordability legislation in a generation. Instead of promoting their efforts, Republican lawmakers were left scrambling when the president abruptly withdrew his support over a separate political fight.

The nation’s housing affordability crisis did not stem from a single event or policy failure. It is the result of years of underbuilding, restrictive local zoning, rising demand and policy decisions and, in many cases, policy inaction.

The legislation reflects the complexity of the crisis, combining a total of 47 proposals aimed at increasing housing supply, reducing costs and expanding access to affordable homes.

But immediate relief may not come just yet for homeowners and renters, said Yonah Freemark, a housing research associate at the Urban Institute. Building new homes takes time, and the law gives short-staffed federal government agencies a new workload to manage.

“We’re talking about a situation where not only will the federal government have to make changes, but then state and local governments also will have to make changes and then businesses, developers, etcetera will have to make investments, which itself takes time,” Freemark said.

Here’s what the new law does – and doesn’t do – to address some of the housing market’s biggest challenges:

Supply constraints

In the years since the 2008 financial crisis, homebuilding has lagged, creating a housing shortage that has pushed prices higher.

The law primarily aims to tackle America’s housing affordability problem by increasing supply. It includes provisions that promote manufactured housing (homes built in factories) and office-to-apartment conversions. It also would authorize a pilot program to offer grants and forgivable loans to fix older homes that have fallen into disrepair.

But many housing experts point to local zoning and red tape as the root of the slowdown in homebuilding. It is difficult for the federal government to intervene, since local governments make their own rules, but the law includes provisions to encourage states and local governments to adopt land use and zoning policies that are more supportive of housing development.

If land-use regulations were relaxed, an extra 2.5 million housing units could be added to the United States in the next decade, according to a 2025 report from Goldman Sachs.

The success of that provision depends on whether these local communities decide to build, though. Many face opposition from so-called NIMBYs, who are often homeowners who oppose more building to preserve home values. When more homes are built and the housing shortage is chipped away, existing homes in the area may sell for less money.

“The legislation can play an important role in encouraging states and localities to make changes to expand housing supply, but it doesn’t require them to make those changes,” Freemark said. “Congress has chosen not to preempt local and state governments and tell them what to do,”

Investors buying up homes

As homes have exploded in value over the past decades, there has also been an increase in people and companies that treat homes as an investment vehicle, rather than just a place to live.

Following the 2008 housing meltdown, private equity firms such as Blackstone bought thousands of single-family homes at bargain prices and turned them into rentals.

In the years after the pandemic, when interest rates fell to historic lows, the housing market erupted. Bidding wars broke out among everyday buyers and home prices surged. Institutional investors picked up the pace of buying in those years, as well.

The law includes a first-of-its-kind limit on these kinds of purchases by prohibiting any investor that owns more than 350 single-family homes from buying any more. However, it doesn’t compel mega-investors that currently own more than 350 properties to sell anything.

Still, most investor-owned homes belong to smaller investors, with the vast majority belonging to “mom-and-pop” landlords who own fewer than 10 properties. And larger investors were already retreating from the single-family market. These days, many real estate investors, including Blackstone, are selling more homes than they buy.

Lack of federal support

The federal workforce has experienced significant cuts since the start of the Trump administration, including employees responsible for housing programs, research and policy.

Whether the provisions of 21st Century Road to Housing Act materially improve housing affordability for struggling Americans depends on how federal agencies execute on their new duties, Shaun Donovan, who was Secretary of Housing and Urban Development under President Barack Obama, told CNN.

“This is a bill that changes rules and regulations. It will unlock funding, but most of the provisions are only as good as the implementation,” Donovan, who is now the CEO of Enterprise Community Partners, said.

The Urban Institute identified 35 different programs, regulations and studies that HUD will need to implement as this law takes effect – at a time when the agency is short-staffed, said Aniket Mehrotra, a housing policy coordinator at the Urban Institute.

“The capacity of HUD to implement this new laundry list of tasks will be limited without additional appropriations for staffing capacity,” Mehrotra said.

The lock-in effect

Among Trump’s objections to the housing affordability initiative was his view that it was “of minor importance compared to lower interest rates.”

It’s true that stubbornly high mortgage rates above 6% have cut into many Americans’ ability to buy a home – in more ways than one.

Higher interest rates have not only increased monthly housing costs, but also created a “lock-in effect” across the housing market. Millions of homeowners who secured ultra-low mortgage rates before the Federal Reserve began raising interest rates in 2022 are reluctant to sell because doing so would likely mean taking on a much more expensive mortgage. That has further limited the supply of homes on the market.

Trump had been highly critical of former Fed Chair Jerome Powell for failing to lower interest rates, and he appointed Kevin Warsh to replace Powell, expecting him to steer the Fed toward lower rates. But last month, many Fed officials signaled in their economic projections that they expect interest rates to rise later this year, due to a renewed pickup in inflation from the war in Iran.

The new housing affordability law does not address the “lock-in” effect or mortgage rates, which loosely track the 10-year Treasury yield, which is dictated by bond investors, not the federal government.

What the new law leaves out

The law also doesn’t address several other forces behind America’s housing affordability crisis, including a lack of federal support for affordable housing, rising construction costs fueled by labor shortages, tariffs and inflation, and the surge in demand for homes that has outstripped supply.

Still, Donovan said that the accomplishment of passing bipartisan housing affordability legislation with an overwhelming majority shouldn’t be downplayed.

“This is hopefully the beginning of an opportunity to keep going,” Donovan said, adding that he hopes there will be a 21st Century Road to Housing 2.0 and 3.0. “Not to get too ambitious, but I think Americans are hungry to know that we can do big things.”

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