U.S. Senate Banking Committee Advances Bipartisan Legislation to Accelerate Housing Supply

Authors:
Ben Metcalf, Terner Center Managing Director
David Garcia, Terner Center Affiliate

On July 29, the U.S. Senate Banking Committee advanced Congress’ first major bipartisan legislative package in decades focused on housing supply. This package, titled the ROAD to Housing Act of 2025, pulls from over 25 bipartisan bills representing a wide range of housing-supply solutions—from incentivizing local and state land use reforms, to updating outdated federal manufactured housing codes, to streamlining approval processes for projects receiving federal funds. 

Over the past several months, this package came together as a result of negotiations between Committee Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA), politicians at opposite ends of the political spectrum. 

Historically, Congress has been reluctant to wade into matters regarding zoning and land use, entitlements, permits, and other areas that fall under the purview of local and state policymakers. This package bucks that trend, balancing local decisionmaking authority with direct federal action on housing. 

While much of ROAD involves narrowly tailored, technical fixes to existing programs, there are several potentially higher-impact proposals. And many of the specific provisions pick up on recommendations from the Terner Center’s past work, including our 2021 federal policy framework. 

The Committee provides a full summary of each of the ROAD to Housing section. Sections likely to have the most impact on housing affordability and housing supply focus on:

Promoting homebuilding with federal dollars 

Developed by U.S. Senators Elizabeth Warren and John Kennedy (R-LA) as part of their Build Now Act, this section conditions future Community Development Block Grant (CDBG) funding on the ability of high-cost, high-vacancy cities to improve their rates of homebuilding against recent trends. Cities that demonstrate housing construction growth would receive bonus CDBG funding above the standard formula allocation. Cities that fall behind would see a portion of their CDBG funding withheld. This approach builds on past federal and state-level efforts to structure pro-housing incentives and accountability measures to catalyze local policy reforms. 

Recalibrating federal regulations to promote infill housing

These sections, developed originally by U.S. Senators Andy Kim (D-NJ) and Mike Rounds (R-SD), expand categorical exclusions in the National Environmental Protection Act (NEPA) to include infill housing. We’ve noted in recent research that while such laws can be important in identifying environmental impacts associated with new development, they also can create barriers and additional costs to new housing development. They can have the unintended consequences of increasing climate impacts by shifting development activity away from existing urban centers (infill) to car-dependent locations (e.g., suburbs) 

Jumpstarting Accessory Dwelling Units and off-site housing construction 

ROAD includes a handful of provisions designed to positively impact key housing types. A provision originally introduced by U.S. Senators Jack Reed (D-RI) and Cynthia Lummis (R-WY) updates the Federal Housing Administration’s Title I lending limits to increase financing options for homeowners interested in adding an Accessory Dwelling Unit (ADU) to their property. Low- and middle-income homeowners have few financing options for constructing ADUs, particularly given high interest rates that make refinancing challenging and the inability of many second mortgage products to underwrite prospective rental revenue. ADUs make up an increasingly critical piece of the overall supply of new homes in many places, as has been most compellingly documented in recent years in California.  

ROAD would also eliminate the U.S. Department of Housing and Urban Development’s (HUD) permanent steel chassis requirement, a bill introduced by U.S. Senators Ruben Gallego (D-AZ) and Thom Tillis (R-NC) that would lower costs for off-site construction of manufactured housing. HUD currently requires certain factory-built homes to be constructed on a permanent steel chassis so that the home can be moved. However, the majority of manufactured homes never move from their original location, meaning that the requirement adds unnecessary cost and complexity to off-site housing, which our work has shown to have the potential to produce housing at a lower cost and in less time than traditional on-site housing. 

Promoting zoning and land use reform at the local and state level 

There are a handful of legislative sections that encourage policymakers to proactively reform their zoning and land use regulations through the development of best practices and technical support. 

An idea introduced this year by U.S. Senators, Lisa Blunt Rochester (D-DE), Mike Crapo (R-ID), John Fetterman (D-PA), and Thom Tillis and included in ROAD to Housing would require HUD to develop zoning and land use best practices to support and inform cities that are proactively exploring strategies to encourage more housing. 

Another section, which pulled from language originally developed by U.S. Senators Lisa Blunt Rochester and Bernie Moreno (R-OH), would require HUD to develop “pattern books,” which are preapproved designs for specific housing types, for use by local planning departments. 

Together, these sections offer a pathway for the federal government to support and scale policies that the Terner Center has identified as best practices to improve housing development feasibility, such as reducing parking requirements, adjusting local rules to benefit smaller-scale “missing middle” homes, and streamlining the permitting and approval process. 

Preserving and creating of new public housing

ROAD lifts the cap on the Rental Assistance Demonstration (RAD) program. This program allows Public Housing Authorities (PHAs) to more readily access private debt and Low-Income Housing Tax Credits to rehabilitate existing properties and add additional units by shifting subsidy from Section 9 public housing funding to project-based Section 8 funding. Currently, there is a limit to how many units PHAs may convert to RAD, and ROAD would eliminate that cap. ROAD also expands the Moving to Work (MTW) program, which allows PHAs more flexibility with how they use the various federal funding sources they receive from HUD. 

Combined, these two provisions could unlock new opportunities for PHAs to much more aggressively access private capital to preserve existing public housing units, as well as to create new ongoing operating subsidies to potentially expand the number of families they serve. Our work has shown that changes such as those proposed in ROAD could have a significant impact on preserving and increasing housing supply for PHAs. 

The ROAD to Housing Act now heads to the Senate floor for a full vote. If passed, the House would next take up the bill, and if it is also passed there, it would head to the President’s desk for signature—a long and arduous path. 

However, even if the ROAD Act were to languish, just the act of advancing the bill out of committee provides a strong list of bipartisan, vetted reforms that can be individually or collectively negotiated into a future “must pass” bill. Indeed, Congress rarely passes stand-alone legislation and increasingly relies on adding policy language to appropriations bills to update and revise federal laws.  

Nonetheless the ROAD to Housing Act has put down a marker for federal action while also opening the door to future, potentially more substantive, legislation. Each of the provisions highlighted above is derived from individual bills with authors from both parties. Indeed, the package makes progress toward housing goals set by both the current and the previous administration. This alignment bodes well for ongoing pragmatic solutions to the nation’s housing challenges. 

Acknowledgments

Thanks to our colleagues, including Sarah Karlinsky and David Dworkin, for their thoughtful reviews of this piece. 

This commentary does not represent the institutional views of the University of California, Berkeley, or of the Terner Center’s funders. Funders do not determine research findings or recommendations in the Terner Center’s research and policy reports.