A Historic Housing Bill Became Law

How, where and when it will affect residential construction

In July, Congress accomplished what many Washington observers considered nearly impossible in today’s modern political climate; 443 lawmakers across the House and Senate united behind the most ambitious legislation in decades to address the nation’s housing underproduction and affordability challenges.

The 21st Century ROAD to Housing Act represents a rare bipartisan recognition that the country cannot solve its housing shortage without removing the regulatory, financing and administrative barriers that delay construction and increase costs. Rather than relying on a single federal solution, the legislation advances a broad collection of reforms intended to help communities build more homes, streamline preconstruction requirements and better align federal housing programs with local needs.

Getting this legislation across the finish line was an effort by lawmakers, their staff and outside stakeholders who provided crucial input to Capitol Hill on how the provisions prescribed in the bill would translate to the real world.

Since 1917, the National Lumber and Building Material Dealers Association (NLBMDA) has served as the voice of America’s independent lumber and building material dealers in Washington. For more than a century, that sustained presence has given the NLBMDA a meaningful role in shaping federal policy on issues ranging from taxes and workforce development to infrastructure and housing. Few issues are more central to the industry today than the nation’s housing shortage and the policies needed to help communities build more homes.

Unlike other national policy arenas, housing policy has largely been left for states and local governments to dictate. Regulatory costs, which according to the National Association of Home Builders account for 26.4% of the average sales price of a $500,000 home, are largely the product of local ordinances and state regulations that the federal government has little to no jurisdiction over.

Given these complexities, addressing the nation’s housing underproduction shortfall, estimated by Freddie Mac at 3.7 million homes, as well as the broader affordability crisis, with the nominal median sales price of a new home up 73% since 2005, will require not one solution, but a range of policies aimed at reducing the costs associated with getting housing built.

This is where 21st Century ROAD to Housing comes in.

Perhaps the best way to describe ROAD’s approach to state and local housing policy is through the carrot-and-stick analogy, though the law relies far more on carrots than sticks. As noted, because the federal government has limited authority to dictate state and local land-use decisions, ROAD instead uses grants, program flexibility and other incentives to reward states and communities that take proactive steps to increase housing supply and improve affordability.

Take, for example, Section 213 of the law, the Build Now Act. Rather than directing communities to rewrite their zoning codes or permitting rules, the provision ties a portion of federal Community Development Block Grant funding to measurable increases in housing supply. Eligible jurisdictions with housing growth at or above the median receive a bonus allocation, while those falling below the median face a 10 percent reduction. Local governments retain control over their land-use decisions, but federal funding will reward communities that translate pro-housing policies into actual homes.

The effects of ROAD will not be felt overnight. The law assigns federal agencies more than 100 housing-related implementation actions, including new rules, guidance, reports, notices and grant programs. Nearly half are due within the first year, with the Department of Housing and Urban Development responsible for the majority of the work. Even after those actions are completed, states, local governments, lenders and developers will need time to adjust their policies and put the new tools to use.

Some provisions will move more quickly than others, while those requiring new funding or additional federal action may take years to fully implement. As a result, ROAD’s impact on housing production will unfold gradually rather than arrive all at once.

For the residential construction industry, ROAD represents not the end of the housing policy debate, but the beginning of a new phase. Its success will depend on how federal agencies implement the law, whether Congress funds its new programs and how communities respond to its incentives. LBM dealers will be a vital link in translating those policies into homes on the ground, supplying builders with the materials, expertise and local knowledge needed to move projects forward. As implementation unfolds, NLBMDA will remain engaged to ensure ROAD delivers practical results by reducing barriers, expanding housing supply and creating stronger conditions for dealers, builders and families searching for an affordable place to call home.

By Matthew Delaney. He is the Government Affairs Coordinator at NLBMDA. He can be reached at mdelaney@dealer.org.