The push by United States President Donald Trump to curb large institutional investors’ role in the housing market is emerging as a central obstacle to a bipartisan U.S. housing reform bill, threatening to complicate passage of legislation that analysts claim could materially expand the supply of affordable homes.
The U.S. Senate on March 12 passed the 21st Century ROAD to Housing Act with an 89–10 vote, an unusually strong bipartisan margin for a bill targeting housing affordability and supply.
The legislation combines more than 40 provisions spanning zoning, financing and environmental rules, aimed at accelerating construction and lowering costs.
However, a provision restricting investor purchases of single-family homes has divided lawmakers as the bill returns to the House of Representatives, where a narrower version passed in February without those limits.
At issue is whether institutional investors should be barred from buying newly built single-family homes if they already own at least 350 properties.
The Senate bill includes a carve-out allowing such investors to build and rent homes, but requires them to sell those properties to individual buyers after seven years.
The restriction has drawn support from figures including Senator Elizabeth Warren, while also reflecting a January executive order from Trump seeking to end large-scale investor homebuying.
Housing economists and industry groups warn the provision could undermine supply.
In a joint statement, the National Association of Home Builders (NAHB), the Mortgage Bankers Association and the National Housing Conference said the seven-year resale requirement would “effectively shut down” build-to-rent development, reducing options for renters.
NAHB estimates the policy could cut single-family housing output by nearly 40,000 units annually.
The investor debate has overshadowed provisions that analysts say could have a larger impact on affordability, particularly those supporting factory-built housing.
The bill expands the definition of manufactured housing, allows homes to be built without a permanent chassis and eases zoning restrictions; changes intended to lower costs and broaden acceptance of the sector.
It’s understood the reforms “streamline federal processes that delay construction and update financing options”, including for rural housing.
Data underscores the scale of the U.S. housing affordability challenge.
The U.S. faces a housing shortfall of around 4 million homes, while the median price of a single-family home is US$400,000 and 30-year mortgage rates remain above 6%.
More than 70% of Americans report concern about housing costs in recent surveys.
Economists argue manufactured housing could play a disproportionate role in closing that gap.
Daryl Fairweather, chief economist at Redfin, said zoning reform and deregulation tied to factory-built homes would be most impactful in high-cost regions where land is scarce.
The bill also expands opportunities for accessory dwelling units, a fast-growing segment of lower-cost housing supply.
Evidence suggests institutional investors, while politically contentious, represent a small share of the market.
An August report from the found investors owning more than 100 properties account for less than 1% of U.S. housing stock.
However, their role is more concentrated in the build-to-rent segment, particularly in states such as Texas and Florida.
The House must now decide whether to adopt the Senate’s investor restrictions as part of a final bill, likely through a conference committee.
The outcome will determine whether Congress prioritises limiting investor activity or maximising housing supply; two goals that, in this legislation, are increasingly in tension.
