MW Republicans and Democrats are joining forces to fix America's housing affordability crisis. Here's what's in their plan.

By Aarthi Swaminathan

A bipartisan group of lawmakers propose cutting red tape and boosting modular-home construction to help more Americans buy homes

The housing market is mired in a crisis of affordability. Can politicians fix it?

A new bipartisan housing bill introduced by Sens. Tim Scott of South Carolina, a Republican, and Elizabeth Warren of Massachusetts, a Democrat, aims to cut red tape that they say slows housing development and will boost construction of modular homes.

The bill is lawmakers' latest attempt to address today's housing crisis.

President Donald Trump recently indicated that he wants to eliminate the capital-gains tax on home sales, which would in theory free up more housing inventory. Homeowners who have seen significant home-price appreciation would not take a tax hit if they were to sell.

The senators' bipartisan bill comes as home prices just hit an all-time high and mortgage rates remain elevated, which has squeezed many first-time home buyers out of the housing market. Buying a house no longer feels like an attainable goal to many Americans, especially younger ones. The typical age of a home buyer hit an all-time high of 63 in 2024, according to the National Association of Realtors.

The bill was advanced unanimously by the Senate Banking Committee. It's significant because politicians from both parties are trying to address the issue of housing affordability, Lisa Sturtevant, chief economist at Bright MLS, told MarketWatch.

"In the past, when federal lawmakers talked about 'affordable housing' they were referring to subsidized housing for low-income individuals and families," Sturtevant said. "However, the affordability challenge has moved up the income ladder and more and more Americans are struggling to afford to buy or rent a home."

As high housing costs burden Americans across the country and across income levels, "elected officials from both sides of the aisle are hearing about those challenges from more of their constituents," she added.

The bill, called the Renewing Opportunity in the American Dream $(ROAD)$ to Housing Act of 2025, seeks to address a critical issue the housing market is facing right now, which is a shortage of homes for sale. Even though supply has been rising sharply, homes are still too expensive for most buyers, and high mortgage rates make affordability even worse.

Read more: Home prices hit an all-time high, but some regions are seeing price declines

The bill now goes to the full Senate chamber for a vote. It is expected to be approved before Congress breaks for recess in August, Jaret Seiberg at TD Securities wrote in a note. If it passes the Senate, the House would vote on the bill, or amend it. The bill would then go back to the Senate, and if approved, to the White House.

To be sure, the legislation is still a proposal and far from a silver bullet that will solve the housing market's current woes. But it does signal that politicians are paying attention to the problem.

"We view these provisions as helpful for housing, but they are not game-changers for home builders or mortgage lenders," Seiberg wrote. "Many are pilot programs or narrow legislative changes. They are not going to change the economics of buying or building a house."

Mark Zandi, chief economist at Moody's Analytics, agreed. In a social-media post, he said that while it's "no game-changer ... policymakers are finally in the game" in terms of responding to the housing crisis.

The National Association of Realtors, the Real Estate Roundtable, the Mortgage Bankers Association and the National Apartment Association all released statements supporting the bill.

The frozen housing market

The housing market in America has been largely stagnant for the past three years. While people are still buying and selling homes, the pace of sales has been the slowest in nearly 30 years.

Home sales are depressed as renters can't afford to make the leap to homeownership and homeowners cling onto their present homes. Many homeowners have ultra-low mortgage rates that make their monthly mortgage payments far more affordable than they would be if they were to buy their same house today.

The depressed mood is affecting home builders' outlook. Faced with grim prospects as buyers steer clear from purchasing homes, builders are resorting to price cuts and upping sales incentives to lure buyers. New homes have traditionally been more expensive than existing homes, but recently their prices have dropped so much that they've become the more affordable option.

Builders are also scaling back new construction, as they anticipate weaker demand.

Against this backdrop, senators on Capitol Hill spent Tuesday morning putting the finishing touches on what they hope will be one path to boosting the supply of new homes, and making homeownership more affordable.

"So many Americans are frustrated by the rising cost of housing and it seems to be a problem that is so elusive that no one seems to find a ... step in the direction of solving [it]," Scott said in a legislative session on Tuesday.

"For years, the American people have called on their elected officials to act to reduce housing costs," Warren added. "The Scott-Warren legislation represents what is possible when both parties put families ahead of politics."

3 ways the ROAD to Housing Act would aim to increase homeownership

Reform zoning and land-use policies and reduce red tape

The legislative package directs the U.S. Department of Housing and Urban Development to develop frameworks to examine zoning and land-use policies, and to overcome barriers that prevent development of more housing.

The National Association of Home Builders said that the ROAD to Housing Act "includes favorable provisions aimed at zoning and land-use policies, rural housing and multifamily housing that will stimulate construction of sorely needed housing," Buddy Hughes, chairman of the NAHB, said in a statement.

Cut through environmental laws that slow down construction of housing

The bill would also cut red tape around environmental reviews often required for residential development, and would allow states and local governments and Native American tribes to streamline processes to boost homebuilding. It also aims to "right-size" the National Environmental Protection Act in an effort to get development projects approved faster. NEPA is an environmental law that ensures federal agencies consider the environmental consequences of their decisions.

In that sense, the bill echoes California Gov. Gavin Newsom's efforts to increase homebuilding in his state by modernizing environmental law that is seen as hindering construction.

"The fact that this bill focuses specifically on reducing regulation related to building housing ... and on incentives to promote changes to zoning and land use policies at the local level... is noteworthy," Sturtevant said.

"Historically there has been little federal legislation around housing supply," she added. "The focus of this legislation on both reducing regulation and on guidance for local changes to facilitate more new housing is definitely different."

Boost manufactured and modular housing

The ROAD to Housing Act also has a big focus on boosting manufactured and modular housing in the U.S., including updating mortgage-lending standards for manufactured housing and expanding financing, as well as directing HUD to encourage modular-housing construction.

While most of the provisions in the bill are not game-changers, one of the biggest winners could be manufactured housing, TD Securities' Seiberg said. "The bill would make changes that industry has long sought," he said, which is "why we view manufactured housing as the biggest potential beneficiary from this legislation."

An alternative path to make homeownership more affordable

The bipartisan bill offers an alternative path to homeownership that is meant to bring the housing market out of its funk. Thus far, politicians in D.C. going up to President Donald Trump have called for lower interest rates as the solution that would reignite the housing market.

Lower interest rates, they say, in the form of lower mortgage rates, would encourage more people to buy and sell homes, and unfreeze the housing market.

To be sure, it's unclear whether lower rates would solve the current affordability crisis or exacerbate it. If borrowing costs go lower and more people jump into the market, home prices could rise even higher.

Plus, "even if rates fell to 6% (which is very unlikely anytime soon), there are other factors that are weighing on the minds of prospective homebuyers and sellers," Bright MLS's Sturtevant said.

Concerns about financial issues and worries about the economy were increasingly cited as reasons why buyers and sellers were staying on the sidelines, according to one recent survey, she noted.

Even if mortgage rates were to fall to 6%, which is unlikely in her view, "there are still economic and financial concerns weighing on prospective buyers and sellers which suggests many will still be hesitant to jump into the market this year," Sturtevant said.

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-Aarthi Swaminathan

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July 29, 2025 15:47 ET (19:47 GMT)

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