21st Century ROAD to Housing Act: Its Importance to Timberland Investors

On July 11, the 21st Century ROAD to Housing Act (the “Housing Act”) became law. It is the most significant piece of housing legislation in a generation, through a series of mostly indirect incentives and funding programs designed to increase housing supply. The bill cleared Congress on June 23, and although President Trump declined to sign it, it became law by default once the period to veto it lapsed. The Act’s goal is to make housing in the United States more affordable by encouraging both new home building and more spending on home improvement. Timberland investors stand to benefit. Residential construction accounts for two-thirds of the structural lumber used in the U.S., so building and refurbishing more homes would strengthen demand for logs and firm up timber markets.

The Federal Reserve Bank of Atlanta calculates that as of April this year, a median-income household needed 43% of its income to buy and carry a median-priced home.¹ A decade ago, the same household needed 28%. That 54% rise in the cost of ownership has put a home out of reach for many buyers.

Part of the reason homes cost so much is that too few are being built. From the start of records in 1959 to right before the Global Financial Crisis of 2008, the U.S. averaged 1.55 million housing starts a year. Since the crisis, that figure has fallen to 1.12 million.² A 28% decline over 18 years has opened a housing deficit estimated at 2 to 5 million homes. Less building and remodeling also means less timber harvested. Softwood sawlog removals, which yield framing lumber, structural plywood, and other building materials, totaled 27 billion board feet in the U.S. last year, 20% below the 34 billion board feet cut 20 years earlier, in 2005.³

The Housing Act takes aim at that deficit through some 50 provisions. None is a “silver bullet” for affordability on its own, but together they could have a measurable effect over time. The main ones include:

• Builder-friendly zoning and permitting: Several provisions press state and municipal governments to loosen restrictive land-use, zoning, and permitting rules that hold back development. This includes tying a city’s federal funding to how many new homes get built. The Act also draws on Federal grant programs to reward municipalities that streamline their permitting process, offer pre-approved housing designs, reform zoning and land-use rules, and adopt higher-density housing.
• Streamlined environmental review: The Act simplifies the environmental review required under the Environmental Policy Act for small-scale and infill housing projects.
• Repairs to aging housing stock: The Act authorizes a pilot program of grants and forgivable loans to help homeowners repair older homes, including those with health hazards.
• Lower costs for manufactured housing: Several outdated rules on factory-built homes have been eliminated, and manufactured homes now qualify for use in government subsidized housing.
• Broader access to construction loans: The Act raises the limits on public-welfare projects, those insured under the National Housing Act (NHA), and indexes them to inflation. Other provisions strengthen community banks’ ability to extend credit to housing projects.

The Act’s most controversial provision would have barred large institutional investors from buying single-family homes. In the final law, that restriction was largely pared back. It now applies only to the purchase of existing single-family homes. Institutional investors remain free to invest in new construction.

The Housing Act is unlikely to change much in the coming year. Its full effects will take time to develop. The largest unknown is how the “carrots” and “sticks” it offers state and local governments will translate into real changes to their zoning, permitting, and land-use rules. Those reforms will likely differ from one city to the next. Some housing markets could see a measurable lift in construction, while others see little or none.

The Housing Act moves in the right direction, but affordability will take more than legislation. Mortgage rates need to ease, and real household incomes need to outpace home-price growth. If those conditions align, we believe housing starts could realistically climb back above 1.5 million a year before the decade is out. Investors holding forest assets in the United States would stand to benefit as demand for their timber rises. The U.S. Pacific Northwest and the U.S. South have the most to gain, as North America’s leading producers of structural lumber and panels.

1. Federal Reserve Bank of Atlanta, Home Affordability Index
2. Source: U.S. Census Bureau and U.S. Department of Housing & Urban Development. Pre-GFC period is 1959–2007. Post-GFC period is 2008–May 2026.
3. Source: Fastmarkets RISI, North American Timber Annual Historical Data