The United States Congress has passed a bipartisan housing bill that is expected to incrementally boost housing supply in the tight market, according to a new report from TD Economics.
Key Provisions of the 21st Century ROAD to Housing Act
The 21st Century ROAD to Housing Act was passed by the House of Representatives and the Senate in late June. However, U.S. President Donald Trump has refused to sign the legislation until another, more controversial bill regarding voter ID is passed. Even if Trump vetoes the bill, TD noted that Congress can still pass it into law with a two-thirds majority vote, and it likely has that support given the bill’s passing involved both parties’ support.
Once law, ROAD should increase the housing supply gradually in the U.S. with provisions aimed at speeding up permitting and removing regulations that can slow down development. The bill also will broaden loan programs to include manufactured homes. Another notable inclusion are measures limiting institutional investment in single-family homes.
Impact on First-Time Buyers and Market Conditions
TD added that the law should remove bottlenecks to new supply in the market, which has stifled ownership growth among first-time buyers facing tight supply and higher prices. It will also widen financing programs available to buyers in lower cost markets. The overall result is a likely increase in supply over several years, TD predicted.
Still, the report noted that high mortgage rates, slower income growth and limited existing inventory remain headwinds to shifting the residential market to more favourable buyer conditions. TD called the bill at least a “step forward toward improving U.S. housing supply,” but the impact will be at best “modest” long-term for those jurisdictions that decide to implement the proposed federal incentives.
