The Senate is moving toward passing the most significant housing legislation in a generation, grasping for a rare bipartisan deal in a Congress deeply divided ahead of midterm elections where the majority is at stake.
The package of bills, which aims to make it easier to build and finance new housing and bolster existing federal assistance programs, has quietly advanced even as lawmakers clash over other issues, including President Trump’s immigration enforcement tactics and the war in Iran.
The progress of the White House-backed package has been all the more surprising because it would tackle a critical cost-of-living issue at a time when Democrats have made it clear they plan to try to weaponize Americans’ economic stress in their campaigns against Republicans as they push to win control of Congress. So far, Democrats appear to have calculated that they do not want to be seen as standing in the way of enacting what could be the only significant legislation to address affordability ahead of the November balloting, wary of opening themselves to Republican attacks that they are not sincere about addressing the issue.
But fresh obstacles have emerged in recent days. Mr. Trump has declared that he will not sign any legislation until Congress delivers him a voter ID bill that has stalled in the Senate, making it clear that the housing measure is not his top priority. And Republicans have begun feuding among themselves over what should be in the final bill, including whether to include a provision to ban the creation of a federal cryptocurrency, complicating the legislation’s chances of clearing Congress at all.
The Senate is expected to approve the bill as soon as Thursday, which would send it back to the House for final passage. But the internal divides among Republicans could hamper its path to the president’s desk.
The legislation, sponsored by Senators Tim Scott, Republican of South Carolina, and Elizabeth Warren, Democrat of Massachusetts — the leaders of the Banking, Housing and Urban Affairs Committee — would streamline production, modernize federal programs, improve financing options, ease regulations and set limits on large institutional investors.
“By removing barriers to affordable housing construction and unleashing investment, this bill stands to open the door to affordable homes for hard-working Americans around the country,” Senator John Thune, Republican of South Dakota and the majority leader, said as he brought it to the floor.
Persistently high rents and home prices have kept the housing market frozen for nearly four years, with sales stalling and fewer people moving. While high interest rates have made it more expensive to buy a home, a lack of inventory has also contributed to the high prices.
The United States has not built enough housing since the foreclosure crisis and is short about 1 million to 7 million homes, depending on how the shortage is calculated. While the White House has mostly focused on the demand side of the crisis, with proposals that could make it cheaper and easier to buy existing homes, the legislation focuses on boosting supply, a goal that may take longer to achieve but could have a lasting impact.
“It’s such a big crisis that affects so many constituents, it’s forced Republicans and Democrats to say, ‘Let’s figure this out,’” said David M. Dworkin, chief executive of the National Housing Conference, the nation’s oldest housing coalition.
The package targets the housing supply shortage from different angles.
Encouraging construction
The package would cut some red tape around environmental reviews for new housing, which can be onerous and lead to months of delays if local opposition challenges a development with excessive reviews, studies and appeals. Such delays can drag out a building process for months or longer, driving up costs.
The legislation would allow communities to use existing federal development grants to build new housing; and reauthorize and update an existing housing program to spur the construction of more affordable housing.
More factory-built homes
Currently, the Department of Housing and Urban Development regulates manufactured housing, which must be built on a chassis, and states regulate modular housing. The legislation would expand the definition of manufactured housing to include structures without a chassis, which would make it cheaper to build and allow for more varied designs, making way for homes with multiple stories and larger footprints.
With more types of factory-built housing under the federal umbrella, builders would be able to standardize and expand their designs, delivering communities structures that are cheaper and faster to put up than stick-built housing. The bill also would update mortgage lending standards for manufactured housing and expand access to financing, and allow an existing federal program to provide grants to communities so they can maintain and protect existing manufactured housing.
Limiting big investors owning single-family housing
The bill also adds a key demand from Mr. Trump: new limits on institional investors in the single-family housing market. A piece of the measure that was spearheaded by Senator Raphael Warnock, Democrat of Georgia, would bar investors who own 350 or more properties from purchasing a single-family home, though they would not have to sell properties they already own. While the bill includes a carve out for homes that are newly built explicitly as rentals, investors would only be allowed to hold onto their newly built rentals for seven years, after which they would be required to sell them.
The legislation would impose strict rules on institional investors when they sell homes, to ensure individual buyers have ample opportunity to purchase them.
While limits on investors have strong bipartisan support from voters, housing experts are doubtful that it will make a significant dent in the housing crisis, and some believe it could have a detrimental effect, potentially discouraging investors from building single-family homes. Most big firms are no longer buying foreclosed homes or homes listed by ordinary sellers. And, of the 72.6 million detached homes in the country, 85 percent are owner-occupied, according to 2023 census data.
There have been compromises as the package — a version of which passed the House in January, and some of which was approved by the Senate last fall — has made its way through Congress. Gone from the Senate bill is a provision that would have encouraged communities to build by tying federal transportation funding to new housing construction. Also jettisoned was a House provision that would have provided guidance for municipalities looking to update their zoning codes.
Carl Hulse and Adam Sella contributed reporting.
Ronda Kaysen, a real estate reporter for The Times, writes about the intersection of housing and society.
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