Fed Passes Bipartisan Housing Act; U.S. Faces 4-Million-Home Supply Gap Amid Affordability Crisis
Congress recently passed the 21st Century ROAD to Housing Act in July—a bipartisan piece of legislation that aims to reduce housing costs and increase housing supply, introducing more than 40 supply-side provisions. However, despite a relatively small annual shortfall between new housing starts and newly formed households last year, more than a decade of underbuilding continues to strain the housing market with a cumulative shortage that has grown steadily over the past decade.
Congress recently passed the 21st Century ROAD to Housing Act in July—a bipartisan piece of legislation that aims to reduce housing costs and increase housing supply. The act introduces more than 40 supply-side provisions, but its impact on affordability will depend on implementation.
The legislation arrives as the U.S. housing market grapples with a severe shortage of affordable inventory. Housing construction is still failing to keep pace with household formation and long-standing pent-up demand, with more than a decade of underbuilding continuing to strain the housing market. In 2025, approximately 1.41 million new households were formed across the United States while 1.36 million housing starts were recorded, resulting in an annual deficit of about 50,000 homes that contributes to a cumulative shortage that has driven rising home prices and reduced affordability, especially for younger buyers.
What the New Law Aims to Solve
Growth in the rental stock over the last ten years has been exclusively higher-rent units, while the number of units renting for less than $1,000 has declined by 7 million, and the number of homes listed for sale affordable to households earning $75,000 or less in March 2026 was down 60 percent from March 2019 levels. The ROAD Act's 40+ provisions target zoning reform, development incentives, and financing mechanisms to unlock new construction.
For expats and newcomers, this supply crisis directly affects rental and purchase costs in virtually every major U.S. metro. Expect continued competition for apartments, especially in affordable ranges. If you're settling in a high-cost city like San Francisco, New York, or Los Angeles, budget 30-50% of gross income for rent and consider suburban or secondary-market cities where new construction is more active. The ROAD Act's effects will likely take 1-2 years to materialize, so immediate housing affordability relief is unlikely.
Sources
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