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    Will building more homes fix affordability? Supply and zoning

    Many researchers say the US has an aggregate housing shortage and link it partly to local zoning rules, and both the July 2026 ROAD to Housing Act and a March 2026 executive order aim to reduce regulatory barriers.[1][2][3][4] Others argue shortages are local, that rising vacancies show supply catching up, or that new market-rate homes will not reach the lowest-income renters without subsidy.[1][5][6]

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    Building more homes has broad support in Congress: the ROAD to Housing Act passed with bipartisan support, including 85-5 in the Senate.[7] But researchers still disagree about how big the shortage is, where it is, and whether new supply helps the households under the most strain. This page sets out the evidence and the competing views. It is not financial or investment advice.

    The facts on supply

    CRS reports that many researchers find an aggregate US housing shortage, with estimates that vary by method. Others argue shortages are concentrated in specific markets or in housing for low-income renters.[1] Indicators have loosened recently. The rental vacancy rate reached 7.1% in 2025, the highest since 2017, and about 1.7 million homes were for sale at year-end, the most since 2019.[5][8] Construction of buildings with five or more units has returned to or exceeded pre-2007 levels, while single-family building has not.[9] In August 2026, starts ran at a 1,275,000 annual rate, and completions were 27.1% below a year earlier.[10][11] JCHS reports that residential mobility hit a record low and that reduced immigration is expected to dampen demand.[12]

    Cost burdens at the bottom remain high. About half of renters have been cost burdened every year since 2006, and two-thirds of renters with incomes under $30,000 were severely burdened in 2024.[13][14]

    Zoning and the 2026 federal push

    CRS notes that many housing researchers identify local zoning and land use policies as one of several contributing factors to undersupply in some areas.[2] Federal influence over local zoning has mostly come through guidance, technical assistance and research.[2] The ROAD to Housing Act, law since July 11, 2026, relies mainly on guidance and grant incentives.[7]

    • It requires HUD to publish “zoning frameworks” guidelines by July 11, 2029.[15]
    • It creates an Innovation Fund for local governments that show improved housing supply growth, authorized at $200 million a year from FY2027 to FY2031.[16]
    • From FY2029, it cuts CDBG allocations by 10% for non-exempt communities with below-median housing growth improvement and gives the money to faster-growing ones.[17]
    • It lets CDBG money pay for new affordable housing construction, up to a limit.[3]

    The new grants still need appropriations.[18] Separately, Executive Order 14394 directed agencies to cut regulatory barriers to new homes, especially single-family homes. HUD published best practices in May 2026.[4] The same law bars large investors from buying more single-family homes from January 2027, a demand-side measure that the administration had also called for.[19]

    The federal approach bets that money and data can change local land use decisions. Its main penalty, the CDBG reallocation, does not start until FY2029, and the Innovation Fund has no money yet. The law’s effect on construction in the next two years is therefore likely to be small, whatever its long-run impact. The facts above are also consistent with more than one story. Rising vacancies and strong multifamily building support the view that supply is catching up in many markets. Persistent cost burdens among low-income renters support the view that market supply alone does not reach them.

    Subsidy and regulation as alternatives

    Harvard’s Joint Center for Housing Studies says the supply of low-rent housing is shrinking and that market forces alone are unlikely to meet the need for deeply affordable homes.[6] Federal rental assistance reaches an estimated one in four eligible families.[20] The 2025 reconciliation law expanded the Low-Income Housing Tax Credit, the main construction subsidy, by 12% from 2026.[21] The FY2027 budget request would eliminate HOME and the Community Development Fund while raising tenant-based rental assistance.[22]

    Rent regulation is the most contested option. New York City’s Rent Guidelines Board voted 7-1 in June 2026 to freeze rents on about 1 million stabilised apartments for leases starting October 1, 2026 through September 30, 2027.[23] Mayor Zohran Mamdani called it “a historic victory” for tenants. An owner representative resigned before the vote, saying the outcome had been decided on the campaign trail.[24] A 2019 study of San Francisco found that expanding rent control cut tenants’ moves by 20% and reduced displacement. It also led landlords to cut rental supply by 15%, which the authors say likely raised market rents in the long run.[25]

    Our assessment, with stated uncertainty: higher mortgage rates in late 2026, with the 30-year average at 7.40% in early October, are likely to weigh on single-family building in the near term.[26] Signals to watch are monthly Census starts and permits and the first HUD rules under the ROAD to Housing Act. In England, the 2025-26 net additional dwellings figures due in November 2026 will show whether supply is speeding up toward the 1.5 million target, which Full Fact rates as “appears off track”.[27][28]

    How to read the debate

    The views differ partly on the facts, such as how large and widespread the shortage is, and partly on goals: broad affordability versus help for the lowest-income renters.[1][6] For background, see affordable housing explained and housing affordability data explained. The main construction subsidy is profiled at Low-Income Housing Tax Credit.

    Competing views

    Build more: supply is the core problem

    Many researchers, and both parties in Congress, see an aggregate shortage partly caused by zoning and permitting rules. The ROAD to Housing Act passed the Senate 85-5 with grants that reward housing growth and penalties for slow-growing CDBG communities.[1][2][7][16][17][4]

    Supply is catching up; shortages are local

    Some researchers say shortages are concentrated in particular markets. Vacancies and homes for sale have risen, multifamily building is above pre-2007 levels, and slower household growth may let supply outpace demand.[1][5][8][9][12]

    Supply alone will not reach the poorest

    Harvard's JCHS and housing advocates say low-rent housing is shrinking and the market will not build deeply affordable homes, so subsidies such as vouchers and LIHTC must grow; rental aid reaches only one in four eligible families.[6][20][14][21]

    Cap rents now

    Some city governments favour rent regulation for immediate relief: New York City froze rents on about 1 million stabilised apartments in 2026. A San Francisco study found rent control protected sitting tenants but shrank rental supply.[23][24][25]

    Next in the crash course

    Developing in World & Policy

    Questions readers ask

    Does the US have a housing shortage?

    Many researchers say yes in aggregate, though estimates vary by method and location. Others argue shortages are concentrated in specific markets or in housing for low-income renters.[1]

    Does zoning cause high housing costs?

    CRS notes that many housing researchers identify local zoning and land use rules as one of several contributing factors to undersupply in some areas.[2]

    What does the ROAD to Housing Act do about zoning?

    It relies on guidance and incentives. It requires HUD to publish zoning best practices by 2029, creates an Innovation Fund to reward local governments that grow housing supply, and from FY2029 shifts some CDBG money from slow-growing to fast-growing communities.[15][16][17]

    Is housing construction rising or falling?

    Housing starts ran at a 1,275,000 annual rate in August 2026, slightly below July and a year earlier, though neither change was statistically significant. Completions were 27.1% below August 2025.[10][11]

    Does rent control work?

    A 2019 American Economic Review study of San Francisco found rent control reduced tenant displacement but led landlords to cut rental supply by 15%, which the authors say likely raised market rents over time.[25]

    Sources

    · 28 claims from 12 publishers

    Each numbered claim is a statement we checked against the sources listed with it. Tap a number in the text to see its sources in place.

    1. [1]

      CRS reports that many researchers see an aggregate US housing shortage of varying size, while others argue shortages are concentrated in specific markets or in housing for low-income renters. confirmedas of 2026-09-25

    2. [2]

      CRS notes that many housing researchers identify local zoning and land use policies as one of several contributing factors to undersupply in some areas; federal influence has come mainly through guidance, technical assistance and research. confirmedas of 2026-09-17

    3. [3]

      Among other things the law lets CDBG funds be used for new housing construction (up to a limit), reauthorizes the HOME program, authorizes CDBG-Disaster Recovery for three years, removes the permanent-chassis requirement for manufactured homes, and creates grants to reward communities that reduce regulatory barriers. confirmedas of 2026-09-25

    4. [4]

      Executive Order 14394 (March 2026) directed agencies to reduce regulatory barriers to new home construction, particularly single-family homes; in May 2026 HUD published best practices on construction costs, land availability and build times. confirmedas of 2026-09-25

    5. [5]

      The US rental vacancy rate was 7.1% in 2025, the highest since 2017 and up from 5.8% in 2022, coinciding with high multifamily construction. confirmedas of 2026-09-25

    6. [6]

      Harvard's Joint Center for Housing Studies, in The State of the Nation's Housing 2026, found nearly half of renter households cost burdened in 2024, slowing construction, record-low residential mobility, and a shrinking supply of low-rent housing that market forces alone are unlikely to replace. confirmedas of 2026-06-17

    7. [7]

      The 21st Century ROAD to Housing Act (P.L. 119-101) became law without the President's signature on July 11, 2026, after passing both chambers with bipartisan support, including 85-5 in the Senate. confirmedas of 2026-09-17

    8. [8]

      About 1.7 million homes were for sale at the end of 2025, the highest since 2019 but lower than in every year from 1995 through 2019. confirmedas of 2026-09-25

    9. [9]

      Construction of units in buildings with five or more units has returned to or exceeded pre-2007 levels, while single-family starts and completions mostly remain below them. confirmedas of 2026-09-25

    10. [10]

      US privately owned housing starts ran at a seasonally adjusted annual rate of 1,275,000 in August 2026, 2.6% below July and 1.2% below August 2025; neither change is statistically significant. confirmedas of 2026-09-17

    11. [11]

      Building permits ran at an annual rate of 1,394,000 in August 2026, and completions at 1,128,000, 27.1% below August 2025. confirmedas of 2026-09-17

    12. [12]

      JCHS reported that residential mobility reached a record low and that reduced immigration is expected to further dampen housing demand. confirmedas of 2026-06-17

    13. [13]

      Every year from 2006 to 2024, roughly half of US renter households (46.3% to 50.7%) were cost burdened. confirmedas of 2026-05-13

    14. [14]

      Among households with incomes below $30,000 in 2024, 67.3% of renters and 57.1% of owners were severely cost burdened. confirmedas of 2026-05-13

    15. [15]

      Section 107 requires HUD to publish guidelines and best practices on state and local zoning and land use ("zoning frameworks") by July 11, 2029. confirmedas of 2026-09-17

    16. [16]

      Section 208 creates an "Innovation Fund" grant program for local governments that show improved housing supply growth, authorizing $200 million a year (inflation-adjusted) for FY2027 to FY2031; HUD must set it up by July 11, 2027. confirmedas of 2026-09-17

    17. [17]

      From FY2029, Section 213 will cut CDBG allocations by 10% for non-exempt communities with below-median housing growth improvement and redistribute the money to faster-growing ones. confirmedas of 2026-09-17

    18. [18]

      The law authorizes new grant programs but does not fund them; implementation depends on future appropriations and rulemaking. confirmedas of 2026-09-25

    19. [19]

      Section 1001 bars companies owning at least 350 single-family homes from acquiring more, with exceptions such as homes newly built to rent; the ban, which the administration had asked Congress to enact, takes effect January 7, 2027. confirmedas of 2026-09-25

    20. [20]

      Nearly all federal housing assistance funding comes from annual appropriations; more than half of HUD's appropriations go to maintaining assistance for about 4.5 million households in the Housing Choice Voucher and Project-Based Rental Assistance programs, which together serve an estimated one in four eligible families. confirmedas of 2026-09-25

    21. [21]

      The 2025 reconciliation law (P.L. 119-21, the "One Big Beautiful Bill Act") permanently raised states' LIHTC allocation authority by 12% from 2026 and cut the tax-exempt bond financing test for 4% credits from 50% to 25%. confirmedas of 2026-09-25

    22. [22]

      The FY2027 request would eliminate programs that received about $9.1 billion in FY2026, including the Community Development Fund (CDBG) and HOME, while proposing increases for the Public Housing Fund and tenant-based rental assistance. confirmedas of 2026-04-30

    23. [23]

      On June 25, 2026, New York City's Rent Guidelines Board voted 7-1 to set 0% increases on one- and two-year rent-stabilized leases starting October 1, 2026 through September 30, 2027, covering roughly 1 million apartments. confirmedas of 2026-06-26

    24. [24]

      Mayor Zohran Mamdani called the freeze "a historic victory for New York City tenants", while owner representative Christina Smyth resigned from the board before the vote, writing that the outcome had been decided on the campaign trail. confirmedas of 2026-06-26

    25. [25]

      A 2019 American Economic Review study of San Francisco's 1994 rent control expansion found it cut tenants' mobility by 20% and reduced displacement, but landlords reduced rental supply by 15%, which the authors say likely raised market rents in the long run. confirmedas of 2026-10-11

    26. [26]

      Freddie Mac's average 30-year fixed mortgage rate was 7.40% in the week of October 8, 2026, up from 7.28% a week earlier and 6.30% a year earlier; the survey is published weekly on Thursdays. confirmedas of 2026-10-08

    27. [27]

      The UK government expects to publish 2025-26 net additional dwellings statistics in November 2026. confirmedas of 2026-10-11

    28. [28]

      An estimated 437,900 net additional homes were delivered in England between 9 July 2024 and 20 September 2026, about 29% of the 1.5 million target; Full Fact rates the pledge as "appears off track". confirmedas of 2026-10-11

    Revision history (1)
    1. Page created.

    Created Oct 11, 2026. Last reviewed by an editor on Oct 11, 2026. Next scheduled review: Nov 20, 2026.

    Cite this page

    "Will building more homes fix affordability? Supply and zoning." ContentLora, updated Oct 11, 2026. https://contentlora.com/analysis/housing-supply-and-zoning-debate

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