Senate Republicans are hard at work on a federal housing bill targeting the all-important buzzword of the 2026 midterm elections: affordability.
President Donald Trump will likely try to square differences between Senate and House Republicans at this week’s GOP Members’ Issues Conference in Florida, including a provision to force large single-family home investors to sell their rental units within seven years. It’s a massive market intrusion by the federal government, being framed by lawmakers such as Sen. Tim Scott (R-SC) as a defense of “the American dream of homeownership.”
For generations, the American dream has meant owning a home. So when people say that dream is dying, they mean younger Americans have given up on ever buying. Monthly mortgage payments recently peaked around $2,800, and modest Federal Reserve rate cuts are unlikely to solve the affordability crunch on their own.
MAJOR HOUSING BILL CLEARS SENATE AND NOW FACES CONFLICT WITHIN HOUSE GOP
What politicians can do is make it easier and more profitable to build more homes. Instead, all we get is one antihousing supply proposal after another.
The housing crisis is easy to explain: incomes rose, but home prices rose much faster. Since 2005, median household income has increased from $46,000 to nearly $84,000, up 81%. Average home prices climbed from $191,000 to $410,800, up 115%. That mismatch has spurred political pressures on the Left and Right to do “something.”
Democrats and Republicans each have their own villains for any policy problem. Some propose it’s all the fault of corporate landlords, private equity firms buying up single-family homes, Airbnb, and even AI tools for landlords. Others are quick to point the finger at immigrants and Fed Chairman Jerome Powell.
The real problem is supply — the U.S. isn’t building enough homes and is short by roughly three to four million units. The situation starts to make even more sense when you consider the rapid decline of building projects for “starter homes” with two bedrooms or fewer. Construction has steadily trended upward, but only for homes with four or more bedrooms.
At every level of government, policy has made housing harder and more expensive to build, and the biggest casualties have been the smaller starter homes sized for two people and a baby. Over time, zoning laws have strangled growth in high-demand areas through single-family-only rules, lot-size mandates, height caps, parking requirements, setbacks, and endless permitting delays.
None of these issues is as easy to message to voters as heavy-handed promises to do rent control, which ultimately protects existing tenants in rent-stabilized units but restricts supply by reducing the incentive to build new rental housing. Downpayment assistance programs also make for good politics, but do nothing to change the supply-demand equation.
They even risk stimulating demand without increasing supply, which can push prices higher.
The answer, as frustratingly simple as it sounds, is to build more housing. This means removing the regulatory barriers, the zoning restrictions, parking minimums, and arbitrary density limits that prevent the market from responding to demand.
The evidence that this works is overwhelming. Auckland, New Zealand, upzoned approximately three-quarters of its residential land in 2016, allowing medium and high-density housing where only single-family homes had been allowed before. The result was a construction boom.
Between 2017 and 2024, Auckland rents rose 12% slower than the rest of the country, and rents were shown to be 28% lower than they would have been without the price-deflating effects of upzoning.
Minneapolis offers a homegrown example. In 2018, it became the first American city to eliminate single-family-only zoning citywide under its Minneapolis 2040 Plan, which also scrapped parking minimums and encouraged density near transit. Research published in 2025 found that in the five years following implementation, home prices were 16% to 34% lower, and rents dropped on average by 28%. Austin, Texas, passed a series of deregulatory measures, allowing developers to add nearly 50,000 rental units in 2023 and 2024 alone — the largest increase for any major U.S. city.
LESS REGULATION, NOT MORE, WILL LOWER HOUSING PRICES
Elsewhere, the median American home now costs nearly five times the median American income. Restrictive zoning is what led us here, but the U.S. can build its way out if politicians have the courage to acknowledge the supply problem at hand.
America cannot afford to continue letting home prices outpace wage growth and price a whole generation out of homeownership. Politics gets so much more toxic when young people don’t have a stake in the economy or the future of the country, which — in essence — that’s what a house of your own really is.
Stephen Kent is Media Director for the Consumer Choice Center