The ROAD to Housing Act carries promise but risks bureaucratic expansion

Continuing concerns over high home prices have prompted Congress to consider federal solutions. The “Renewing Opportunity in the American Dream to Housing Act of 2025,” ROAD to Housing Act, is a broad bipartisan housing bill proposing several responses to the persistent housing shortage. The Senate passed it after it was incorporated into the National Defense Authorization Act in October, and it is now awaiting approval by the House. The bill’s bipartisan support highlights the urgency of the housing crisis; however, many analysts caution that expanding the federal role in land use carries risks that deserve scrutiny.

One reason the act has gained support is that it avoids preempting local zoning authority outright. Instead of overriding local control, the act focuses on research, guidance, and incentives for localities that choose to reform their zoning and regulatory frameworks. While this approach may seem like a balanced first step, it raises important questions about how far federal agencies should go in shaping local decisions. Incentives and guidance can easily evolve into indirect pressure, administrative burdens, or expectations that narrow the flexibility of states and localities. Even if all the bill’s provisions are implemented, it will not, on its own, significantly reduce price pressures. States and local governments still must reform their restrictive systems.

The ROAD to Housing Act utilizes a range of policy tools, grouped into four general categories: mandated reports, financial incentives for regulatory reform, adjustments to housing finance programs, and updates to existing federal supply-side initiatives. This bill takes the unusual step of focusing on expanding housing supply before turning to subsidy-heavy approaches, which marks a shift from many earlier federal housing proposals. Even with this emphasis on supply, the breadth of the bill makes it difficult to evaluate as a cohesive policy approach, and combining many unrelated programs into a single package increases the risk of mission creep, a problem common across federal housing initiatives.

New reports

A major component of the ROAD to Housing Act is its mandate for a series of reports from the Government Accountability Office (GAO) and the Department for Housing and Urban Development (HUD). Many of the reforms highlighted in these guidelines are supported by evidence, including reducing minimum lot sizes, parking reform, allowing accessory dwelling units (ADUs), and streamlining both zoning and building codes. Collectively, these reports would be mandated by the Housing Supply Frameworks Act. The Housing Supply Frameworks Act is the portion of the broader bill that directs GAO and HUD to develop these reports and model guidelines, essentially serving as the research and planning section within the ROAD to Housing Act. However, federally curated guidance often becomes an informal standard that localities feel pressured to follow, even when local conditions differ. Analysts at institutions focused on federalism have frequently warned that benchmarking and advisory frameworks can grow into de facto expectations that add new bureaucratic oversight without meaningfully accelerating supply.

However, requiring research and monitoring by HUD and GAO into these reforms is not equivalent to enacting them. Local governments must implement these changes to enable supply adjustment, and that is where they are likely to encounter resistance. Knowing these barriers, this act goes one step further to nudge local governments toward enacting these proposed reforms.

Federal financial incentives for reform

Beyond requiring research, the ROAD to Housing Act establishes several incentives to local governments that expand their housing supply. Most notably, it establishes a $200 million “Innovation Fund,” which will be awarded annually by HUD to local governments that demonstrate measurable supply expansion from 2027 to 2031. Grants will range from $250,000 to $10 million and be awarded to no fewer than 25 recipients annually.

This could encourage cities to take on politically difficult zoning reforms. However, federal grants can also cause jurisdictions to prioritize actions that maximize eligibility rather than reforms that address the most significant structural barriers. Jurisdictions may make symbolic or superficial changes to qualify for funding while avoiding deeper reforms that could truly expand housing options. There is also the possibility that some jurisdictions will benefit from market-driven supply increases unrelated to any policy change, while others with genuine constraints receive little or no support.

In addition, the ROAD to Housing Act establishes several other grant programs to expand home supply through rehabilitation. Notably, the Whole-Home Repairs Act and the Revitalizing Empty Structures Into Desirable Environments (RESIDE) Act give grants and forgivable loans to low-income homeowners and small landlords looking to repair old or dilapidated structures, through differing avenues and terms. Further, under the Accelerating Home Building Act grants are provided to local governments to develop pre-approved designs. These grant programs are also to be administered through HUD. 

Rehabilitation programs help preserve aging housing and prevent the loss of existing units. Still, they do not meaningfully expand overall supply in markets where zoning and permitting rules limit the addition of new homes. The act also supports pre-approved building designs through the Accelerating Home Building Act. These efforts may help simplify parts of the construction process, but without broader zoning reform, pre-approved plans will not significantly expand supply. HUD’s growing portfolio of grant programs also raises concerns about administrative complexity.

Mortgage reform

The ROAD to Housing Act includes several demand-side tweaks to the existing housing finance landscape to aid accessibility. Included as part of the act are incentives to increase the role of small-dollar loan originators and the expansion of Title I loans to cover the construction of accessory dwelling units (ADUs) and the purchase or improvement of manufactured homes. Further, this act expands existing financial literacy programs.

While these may help certain borrowers, demand-side tools do not directly address the primary driver of high prices: inadequate supply in many communities. If supply does not increase, new lending programs can unintentionally raise prices by boosting purchasing power without increasing the number of available homes. Because the act also aims to encourage supply-side reform, the risk is smaller than in past demand-driven programs, but it still warrants caution.

Reforming existing housing programs

Finally, this act makes several positive adjustments to existing housing programs. For example, it lifts the cap on the Rental Assistance Demonstration (RAD) program, which allows local Public Housing Authorities (PHAs) to convert public housing into privately-managed Section 8 housing and is largely beneficial for tenants. Further, through the Build Now Act, it ties community block grants, one of the largest federal affordable housing and development grants, to broader housing supply, thereby again incentivizing land-use liberalization. Regarding private investments in affordable housing, it raises the cap on public welfare investments by banks, many of which directly support affordable housing initiatives.

This could encourage better land-use regulation, but it also imposes additional conditions on one of the largest federal development programs. The expansion of caps on public welfare investments for banks will likely increase private capital in affordable housing projects, though it also raises questions about the growing federal influence over private investment decisions.

Conclusion

Taken together, these provisions aim to connect federal programs more directly to local regulatory reform and affordable housing investment. The intent is to support voluntary action rather than mandate it. However, there is a real risk that expanding federal incentives, guidance, and grant programs will overshadow the need for comprehensive local reform. A meaningful improvement in housing affordability still depends on states and cities reducing exclusionary zoning, shortening permitting timelines, and updating outdated building codes. The ROAD to Housing Act identifies many contributors to high housing costs and encourages local governments to take action. The bill includes several positive elements, especially the emphasis on zoning reform and regulatory streamlining. At the same time, it carries risks of administrative expansion, program duplication, and indirect federal involvement in land use decisions. A balanced assessment should highlight both the promise and the pitfalls of the act. Federal guidance and financial incentives can only support affordability if they help remove barriers to housing expansion rather than add new layers of oversight. Genuine progress requires local and state governments to confront and reform the regulatory barriers that continue to limit housing supply

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Source: https://reason.org/commentary/the-road-to-housing-act-carries-promise-but-risks-bureaucratic-expansion/