2026 Federal Housing Policy Review
January 27, 2026
Article by David Garcia, Terner Center for Housing Innovation, January 21, 2026
Link to article here.
After a surprising year of housing policy bipartisanship, lawmakers in Washington, DC are poised to continue pushing for housing supply and affordability solutions in 2026. At the same time, ongoing actions by the administration will continue to pose challenges to housing providers, developers, and the most housing insecure, while new and potentially forthcoming orders demonstrate a willingness to use executive power to address affordability concerns. As we head into an election year, there are several developments worth following in federal housing policy. This commentary previews the year ahead in Washington, DC.
Housing packages are poised to move forward in 2026.
By the end of 2025, both the House and Senate had advanced their own bipartisan bills to increase housing supply and promote affordability. And while the two packages (The ROAD to Housing Act in the Senate, and the Housing for the 21st Century Act in the House) have several unique and novel components, they also feature many overlapping and/or complementary features. Both packages have an opportunity to progress in the first half of this year before lawmakers turn their attention to the November election.
The ROAD to Housing Act, which passed out of the Senate Banking and Insurance Committee unanimously and was nearly passed into law as an amendment to the National Defense Authorization Act (NDAA),[1] contains several provisions that would have a positive impact on housing supply. These provisions include an expansion of the Rental Assistance Demonstration program (RAD) to preserve existing public housing,[2] reforms to existing federal loan products to support Accessory Dwelling Unit (ADU) financing,[3] and new programs leveraging existing federal dollars to promote more homebuilding in supply-constrained markets. As noted in a Terner Center commentary, the negotiation and advancement of ROAD to Housing represent a shift in how policymakers are approaching federal engagement on housing supply issues.
The Housing for the 21st Century Act advanced from the House Financial Services Committee on a vote of 50-to-1 just before the end of 2025. The Act includes provisions that are similar or identical to ROAD to Housing—for example, the Housing Supply Frameworks Act, reforms to the National Environmental Protection Act, and increases to Federal Housing Administration (FHA) mortgage insurance for residential multifamily construction. However, the proposed House legislation also includes a number of unique ideas that would support increases in housing supply and affordability. These include changes to the application of Build America, Buy America requirements for new homes using HOME Investment Partnerships Program (HOME) funding,[4] requirements that cities report on their progress toward reducing barriers to housing production as part of federal funding reporting, and an examination of how building code reforms could reduce the cost and complexity of homebuilding.
Lawmakers have limited time to move each package forward before members turn their attention to their respective 2026 election campaigns. In the Senate, ROAD to Housing must now be brought back to a vote of the full chamber. The next step for the Housing for the 21st Century Act will be a vote on the floor of the full House. Both could be advanced in the earlier part of the year, setting up a conference committee between the two chambers to send legislation to the president’s desk for signature into law.
The budget deal is poised to maintain funding for critical housing programs.
Senate and House members released their FY 2026 budget agreement on Tuesday, which generally maintains and even increases some funding for affordable housing and infrastructure programs, while increasing resources to vulnerable residents—despite earlier indications that those programs would face steep reductions. For example, lawmakers have proposed that the Community Development Block Grant (CDBG) Program and HOME both maintain the same funding levels as FY2025 after earlier facing nearly $1 billion less in last year’s budget proposal. In addition, $50 million is included for another round of the CDBG PRO HOME program, which provides support for localities pursuing land use and zoning reforms. Legislators have also proposed a funding increase over FY2025 levels for Housing Choice Vouchers (HCV), Project Based Rental Assistance, and Homeless Assistance Grants. Congress, which has been operating on a continuing resolution since November of last year, has until January 30 to vote on the full budget.
The budget deal also appears to include a solution for the Emergency Housing Voucher (EHV) program, which provides rental assistance to people experiencing or at risk of homelessness. EHV program funding was set to run out before the end of 2026. In the budget, $600 million is allocated to Tenant Protection Vouchers, which can be used to support current EHV holders. This is significant as our recent analysis notes that over 50,000 households nationwide are served through the program and would be at risk of losing that assistance.
The funding bill also includes language that would amend the U.S. Department of Housing and Urban Development (HUD’s) newly proposed guidelines for its largest homelessness program, the Continuum of Care (CoC) Program, which are currently suspended by a court order. HUD’s proposed funding criteria would have changed the CoC Program in many ways that would shift funding away from current permanent housing programs, potentially jeopardizing housing for 32,000 people in California. The bill would limit the extent to which HUD can make these shifts. It would also ensure funding continuity for current program awards that are scheduled to end prior to the next funding application process.
Executive Actions will continue to impact housing markets.
In addition to Congressional activity, the administration has signaled for several months that it has been working on Executive Actions to address housing supply and affordability, with President Trump saying in December that actions will include “some of the most aggressive housing reform plans in American history.”[5]
Statements from other administration officials signal that such actions could include the creation of new mortgage products and rule changes to allow for potential homebuyers to tap their 401(k) for down payments, as well as conditioning federal funds for states and cities on the adoption of policies to make it easier to build new homes. On January 20, President Trump also signed an Executive Order, which he alluded to in his remarks at the World Economic Summit, directing agencies to pursue initiatives aimed at curbing large institutional investor activity in the single-family home market. The Order would have the attorney general and the Federal Trade Commission review large acquisitions for anti-competitive practices and order other departments to promote sales to owner-occupants.
In addition, continued action on tariffs and immigration are likely to have a substantial impact on new supply. For example, multiple analyses by researchers and industry groups note that tariffs imposed or proposed in 2025 have the potential to increase the cost and uncertainty of new homebuilding. Increased deportation activity has also put a chill on residential construction labor supply, where immigrants comprise roughly a quarter of the labor force.[6] In California, more than two-thirds of California contractors cite skilled worker shortages as their top concern, and the state has faced a net loss of construction workers just in the last year.[7]
This year is likely to be consequential for housing affordability.
Polling going into this election year suggests that housing affordability will continue to be a consequential issue, and during campaign season, members of both parties are likely to want to showcase their efforts to advance meaningful legislation. Moreover, success on housing this year could set the table for even greater reforms in the next Congress and beyond. But for this momentum to continue into the next Congress, maintaining bipartisan support for housing solutions during what is likely to be a highly polarizing campaign will be critical.
Endnotes
[1] Lawmakers in Congress will often leverage “must-pass” bills to advance other priorities that are not relevant to the “must-pass” legislative vehicle. The NDAA is considered a “must-pass” bill to ensure funding for national defense.
[2] The RAD program allows public housing providers to rehabilitate existing units by leveraging private debt. We explored the potential of this program in a 2023 paper.
[3] A 2022 Terner Center paper explored the creation of loan products through existing federal programs specifically to provide homeowners with a broader selection of financing options.
[4] The Build America, Buy America Act (BABA) requires that all iron and steel, construction materials, and manufactured products used in federally funded infrastructure projects are produced in the United States. Affordable housing organizations have raised concerns that requiring affordable housing projects to adhere to BABA raises the cost of development.
[5] Samuels, B., & Manchester, J. (17 December, 2025). “Trump touts ‘warrior dividend’ checks, housing reform in address to nation.” The Hill. Retrieved from: https://thehill.com/homenews/administration/5654365-trump-primetime-address-housing-checks/
[6] National Association of Homebuilders. Concentration of Immigration in Construction Trades. Retrieved from: https://www.nahb.org/advocacy/industry-issues/labor-and-employment/immigration-reform-is-key-to-building-a-skilled-workforce/concentration-of-immigration-in-construction-trades
[7] The Home Builders Institute (HBI) Construction Labor Market Report. (2025). Home Builders Institute. https://hbi.org/wp-content/uploads/2025/10/Fall-2025-Final-Construction-Labor-Market-Report-Update.pdf; California Construction Workforce Trends 2025. (2025). ABLEMKR. https://ablemkr.com/california-construction-workforce-trends-2025/