On Friday, President Trump issued a pair of Executive Orders focused on increasing affordability and access to the housing market. Combined with ongoing negotiations in Congress on the 21st Century ROAD to Housing Act, they reflect a bipartisan focus in Washington on expanding housing construction and affordability in 2026.
Executive Order: Removing Regulatory Barriers to Affordable Home Construction
The executive order focuses primarily on reducing regulatory barriers and streamlining Federal permitting to expedite housing development, targeting three broad regulatory categories for rollback or elimination: stormwater/wetlands management, energy efficiency and building regulations, and certain development density requirements. The impact of reducing stormwater management and energy efficiency are fairly straightforward, reducing up-front development costs and freeing additional land for development. The section on reducing development density requirements focuses on certain Federal grant programs and likely reflects a re-allocation of funding from dense, transit-oriented, urban communities to single-family suburban and exurban homes.
The order also directs agencies to expedite reviews under the National Environmental Policy Act (NEPA) and historic preservation laws, perhaps as far as categorically excluding housing and related infrastructure. Categoric exclusion would be a game-changer for developments impacted by these laws, reducing review from years to weeks. Otherwise, a less restrictive review process, while helpful at the margin, will have little impact if complete Environmental Impact Statements and judicial review processes are still required. Similarly, the administration intends to issue best practices for state and local governments, but, absent incentives or mandates, these are only effective to the extent that they are adopted.
Finally, the administration directs HUD and Treasury to coordinate New Markets Tax Credits and Opportunity Zone incentives to further single-family home construction. These programs are both structured to require long-term hold periods for the incentive to be effective, which would seem to preclude the traditional build-to-sell single-family home, although the rising build-to-rent market would be a more straightforward fit. A substantial change to enable single-family housing development may have other interesting effects on traditional projects funded through these sources.
Executive Order: Promoting Access to Mortgage Credit
The executive order is intended to reduce the regulatory burden on mortgage issuers, especially small and community banks, in order to stimulate the lending market for homebuying. It specifically targets banking regulations promulgated under the Dodd-Frank Act. The executive order is light on specifics, so lenders and financial institutions should pay close attention to regulatory changes that may be promulgated in the weeks and months to follow. However, there are a few elements of the order that can be considered straightaway.
First, the Executive Order directs banking regulators to take a more forgiving approach to oversight and enforcement. Regulators are directed to limit enforcement to willful and reckless actions and to focus on cure-first corrections rather than enforcement actions in banking and consumer finance. Combined with the forecasted changes to the banking regulations, the administration is clearly pushing to increase lending by smaller banking institutions through a mix of relaxed regulatory requirements and a more forgiving enforcement approach.
Second, the Executive Order provides for some efficiency improvements, allowing for changes in the appraisal process and additional use of electronic signatures instead of wet signatures.
Rolling back regulations to the pre-2008/Dodd-Frank era will lead to concerns about a repeat of the 2008 housing-driven recession. At the same time, the housing market has not recovered to the pre-2008 era. Housing starts and sales have stayed below market conditions in the late-1990s and 2000s. A prudent examination of banking rules and regulations may increase mortgage issuances without substantially impacting market risk. The forthcoming regulations bear watching.
Eyes on Congress
On the other end of Pennsylvania Avenue, Congress has been debating the 21st Century ROAD to Housing Act. A bipartisan initiative led by the Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren, the bill has recently passed the Senate and is now being considered by the House. Negotiations between the House and Senate are already complicated and the President’s actions may further complicate the situation.
ROAD goes beyond the Executive Orders in scope, aligns in some ways, and differs in others. It proposes significant changes to Federal HOME and CDBG programs, allowing for additional flexibility to support housing projects. It contains several regulatory relief provisions for both permitting and financing. Controversially, the bill would put significant restrictions on institutional investment and ownership, potentially crippling the build-to-rent market.
What Will States & Locals Do?
Finally, both the President and Congress show the limitations of Federal action in housing. Permitting, financing, and development are heavily influenced by State and local laws and regulations. Neither the President nor Congress are proposing substantial inducements for State or local action, either through carrots or sticks. Ultimately, substantial changes in the housing markets will require states and local governments to seriously take on regulatory and market impediments to housing construction of all types in order to generate supply and affordability.
Contact
As federal housing policy continues to evolve, developers, lenders, and investors should closely monitor regulatory and legislative developments that could affect housing supply, financing, and project timelines.
KJK’s Real Estate and Economic Development team regularly advises clients on navigating regulatory changes, development incentives, and financing structures. To discuss how these developments may affect your projects or investment strategy, contact KJK partners David Ebersole (DME@kjk.com), Jon Pinney (JJP@kjk.com) or Matthew Viola (MTV@kjk.com).