Congress is putting housing money on the line. Here’s where it could matter most.
Signed into law last month by President Trump, the 21st Century ROAD to Housing Act aims to cut away some of the red tape that’s currently driving the shortage of affordable homes in the U.S. In a new report, Realtor.com took a look at how some of those changes are poised to remake local housing policy around the country.
The bill, which was championed by Republicans and Democrats alike, addresses the housing crisis from a few different angles. Its solutions include allowing pre-approved home designs to speed up the permitting process, strengthening community and rural banking with a focus on local lending, and modernizing programs under the Department of Housing and Urban Development.
One of the bill’s notable changes is updating a HUD program that offers federal block grants to help communities unlock more affordable housing. Those grants are doled out on a yearly basis to cities, states, and counties to boost housing and economic opportunities for low and moderate income Americans. “Homeownership should be within reach for more Americans, and this law moves us closer to that goal,” House Financial Services Committee Chairman French Hill, who sponsored the bill, said of its goals.
Under the bill’s changes, that pool of federal money can flow directly toward building new affordable housing. Communities that add more housing become eligible for bigger allotments through HUD’s Community Development Block Grant (CDBG) program, while locales that don’t boost housing stock will see their award allocations shrink. Traditionally, those funds have gone toward infrastructure, economic development, and public service – not directly toward constructing new places to live.
“[Community Development Block Grant] funding can be a meaningful tool for local governments, particularly because communities have flexibility in how they put those dollars to work,” Realtor.com Senior Economist Joel Berner said.
What cities could flip the script?
The country’s biggest cities are granted the biggest CDBG awards. In 2023, New York City received nearly $170 million through the HUD grant program, with Chicago and Los Angeles trailing at $75 million and $50 million, respectively. While those awards dwarf what less dense metro areas receive, Realtor.com found that the grants actually have a bigger impact in smaller cities like Camden, New Jersey and Saginaw, Michigan, where the funds make up a proportionately larger part of a smaller city budget. “The current payout structure is unlikely to change housing policy in most large cities when the potential penalty is a tiny fraction of their overall budgets,” Berner said.
Across cities with more than 250,000 people, Realtor.com examined which cities stand to benefit most from changes that unlock CDBG funding for building new homes. In cities like Milwaukee, Detroit, Toledo, Newark, Cleveland, Buffalo, Pittsburgh, Jersey City, and Saint Louis, CDBG funding is a relatively important part of the city budget while newly-built homes make up a small share of listings.
That combination of factors means that those markets could be well positioned to benefit from the new housing incentives, which give extra money to cities that are aggressively adding housing stock. In all those cities, the share of newly-built homes is just a sliver of the national average of 18%, while the city’s CDBG funds account for around one percent or more of local revenue.
“Targeting incentives at places where homebuilding is least active could help unlock development where it is needed most,” Berner said. “The key question is whether cities can reduce regulatory barriers and make it easier to build. If Congress wants this program to drive broader change, however, the financial stakes will likely need to be larger.”