Congress Passes Major Housing Affordability Reform Legislation

Why It Matters

Housing affordability is one of the most persistent economic pressures facing American families, driven by rising home prices, climbing mortgage rates, higher property insurance costs, and constrained supply in markets across the country. The Housing for the 21st Century Act is Congress's most comprehensive attempt in years to address those pressures through a single piece of legislation, touching everything from local zoning rules and environmental review timelines to manufactured housing definitions and community bank regulations. The bill now sits in a precarious spot between two chambers that passed significantly different versions of it.

The Big Picture

The House passed H.R. 6644 on February 9, 2026. The bill contains six titles and 38 sections spanning housing supply, federal housing program modernization, manufactured housing, borrower protections, congressional oversight, and a substantial community banking package.

The committee report accompanying the bill describes its purpose as making it "easier to build and afford housing, including modernizing outdated government programs, lowering costs by removing unnecessary federal requirements, and increasing local flexibility over housing decisions."

On the supply side, the bill would direct HUD to publish land use guidelines and best practices for state and local zoning reform, replacing the existing Regulatory Barriers Clearinghouse. It would also create a competitive grant program for local governments to adopt pre-reviewed housing designs, known as pattern books, which can speed up permitting approvals. A separate provision would require HUD to issue guidance on single-stair building designs for multifamily structures up to six stories, a reform proponents argue would lower construction costs and make small-lot development more feasible. The National Fire Protection Association has raised concerns about fire safety implications of single-stair designs.

On environmental review, the bill would categorically exclude several housing activities from full National Environmental Policy Act review, including infill housing projects on previously disturbed lots of no more than five acres. Four additional activities currently subject to environmental review would be reclassified to require no such review at all, provided they do not materially alter environmental conditions.

The bill would also reform the HOME Investment Partnerships program, which has not been reauthorized by Congress since 1992, raising income eligibility for homeownership assistance from 80 percent to 100 percent of area median income, expanding Community Land Trust provisions, and exempting small-scale projects of fewer than four units from several program requirements. Separately, it would make new housing construction an eligible activity under the Community Development Block Grant program for the first time, capped at 20 percent of a grantee's allocation.

On the finance side, the bill would increase FHA multifamily loan limits and change the index used for annual inflation adjustments from the Consumer Price Index to the Census Bureau's Price Deflator Index for Multifamily Residential Units Under Construction. It would also authorize a pilot program to improve access to small-dollar mortgages, a segment of the market where lenders have historically faced profitability challenges due to fixed origination costs, and raise the cap on bank public welfare investments to a single institution from 15 percent to 20 percent of unimpaired capital and surplus.

For veterans, the bill would exclude VA disability benefits from income calculations used to determine eligibility for the HUD-VA Supportive Housing program, addressing a documented problem where disability payments push veterans over program income thresholds. It would also require the Federal Housing Finance Agency to add language to the Uniform Residential Loan Application alerting veterans to potential eligibility for VA home loans.

Title VI, added only in the House version, contains 13 sections of community bank regulatory relief. These include exempting custodial deposits from brokered deposit classification for well-capitalized institutions with less than $10 billion in assets, easing examination requirements for well-managed banks with $6 billion or less in assets, restricting acquisition of failing banks by globally important banking systems, and creating a pilot program allowing new banks to phase in capital requirements over two years. The Congressional Budget Office determined the House-passed version would not increase the deficit.

The Senate passed a different version of the bill on March 12, 2026, combining H.R. 6644 with provisions from the ROAD to Housing Act of 2025 under the short title "21st Century ROAD to Housing Act." The Senate version omits the entire Title VI banking package and several other House provisions, including the single-stair building guidance and the FHA small-dollar mortgage pilot. It adds two provisions not present in either chamber's original bills, namely restrictions on single-family home purchases by large institutional investors, and a provision related to central bank digital currency.

Political Stakes

For the Administration

The bill's deregulatory thrust, particularly the National Environmental Policy Act (NEPA) streamlining and the emphasis on reducing federal mandates on local governments, aligns with the Trump administration's broader regulatory agenda. The veterans' housing provisions also track with stated administration priorities.

But the bill also expands several federal housing programs through new grants and pilot programs, which could draw scrutiny from budget-focused officials. Perhaps more consequentially, the administration will need to navigate the conference process between two chambers that passed substantively different bills, particularly on the banking provisions which have no Senate counterpart.

For Congress

The bipartisan House passage is notable, but the Senate's decision to strip the banking title and add new provisions creates a real conference challenge. The banking sections in Title VI represent a package of community bank relief measures that the House Financial Services Committee had previously advanced as stand-alone bills. Losing them in a final bill would be a setback for that coalition. The Senate's addition of institutional investor restrictions, and the digital currency provision, introduces new political variables that were not part of the original House negotiation.

For the Public

Whether the bill's housing supply provisions, if enacted, actually translate into more housing units at lower cost will depend heavily on implementation at the state and local level. The bill's approach is largely to provide guidance, incentives, and streamlined federal processes rather than mandates. That means local governments retain significant discretion over whether to adopt the reforms the bill encourages.

The Bottom Line

The Housing for the 21st Century Act represents the most comprehensive Congressional housing bill in years, but it now faces a conference process between two chambers that disagree on significant portions of it. The House version's banking package has no Senate equivalent, and the Senate added provisions the House did not consider. What emerges from that negotiation, if anything, will determine whether this legislation delivers on its stated goal of making housing easier to build and afford, or whether the gaps between the two chambers prove too wide to bridge.

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