In the second half of 2025, both the House and Senate advanced major bipartisan housing authorization packages, underscoring sustained congressional attention to housing supply, financing constraints, and program efficiency. In December, the House Financial Services Committee approved the Housing for the 21st Century Act by a 50–1 vote, sending a broad housing framework to the House floor. Earlier in the year, the Senate advanced its counterpart, the ROAD to Housing Act, which passed unanimously out of the Senate Banking Committee and was later included in the Senate-passed FY 2026 National Defense Authorization Act (NDAA). Although the housing provisions were ultimately removed during final NDAA negotiations, their initial inclusion reflected strong bipartisan support in the Senate.
A key area of alignment between the House and Senate bills is the proposal to increase the statutory public welfare investment (PWI) cap for banks from 15 percent to 20 percent of capital and surplus. The current cap has become a binding constraint for many financial institutions, limiting their ability to make additional equity investments in Housing Credit and other community development projects despite ongoing market demand. Raising the cap would expand private investment capacity without creating new federal spending, which helps explain its durability across chambers and political parties.
Different Legislative Lanes, Shared Direction
While the two bills overlap in important ways, they reflect different legislative strategies. The Senate’s ROAD to Housing Act takes a broader approach, combining housing supply measures with community development, disaster recovery, and preservation reforms. Its inclusion in the Senate NDAA represented an effort to move housing policy through a must-pass vehicle, though that approach ultimately did not survive House consideration.
The House bill, by contrast, was structured as a consolidated, committee-driven package built from dozens of previously introduced measures. The Housing for the 21st Century Act places particular emphasis on deal feasibility, financing alignment, and program streamlining, especially within HUD-administered programs. This design positions the bill for consideration through regular order or for inclusion alongside other legislative vehicles once appropriations work is resolved. House leadership has indicated interest in floor consideration in early 2026, though timing remains dependent on broader legislative priorities.
HOME Reform: Divergence with Real Implications
Another notable distinction between the House and Senate packages is their treatment of the HOME Investment Partnerships Program. Both include HOME-related provisions, but the House bill goes further in reducing regulatory friction. Its reforms focus on streamlining environmental reviews, adjusting Section 3 compliance, and exempting HOME from Build America, Buy America requirements—changes that respond to long-standing concerns about cost escalation and administrative delays when HOME is layered with other financing sources.
Because roughly 15 to 20 percent of Housing Credit developments use HOME funding in a typical year, these changes carry direct implications for LIHTC feasibility, particularly for smaller developments, rural projects, and preservation transactions. The Senate bill includes more limited HOME adjustments, making the program one of the areas most likely to require negotiation if Congress moves toward a unified housing package.
Why the PWI Cap Is Central to Housing Credit Production
Among the provisions shared by both bills, the PWI cap increase stands out as one of the most consequential. A growing share of Housing Credit equity already comes from banks nearing the current 15 percent cap, constraining new investment even as development needs remain high. When Congress last increased the cap in 2006, public welfare investments expanded significantly over time.
Raising the cap would unlock additional equity, stabilize pricing, and expand deal flow, particularly in markets where higher construction costs and interest rates have strained feasibility. For Texas, where Housing Credit production relies heavily on private capital participation and bond-financed developments, the PWI cap increase is closely tied to maintaining pipeline stability and production capacity.
FY 2026 Appropriations: HUD Funding Still Pending
While Congress debates longer-term housing policy through authorization bills, near-term outcomes will be shaped by FY 2026 appropriations. Lawmakers are racing to finalize spending ahead of the January 30 expiration of the current continuing resolution, moving remaining bills through smaller “minibus” packages. Several major appropriations measures are still unresolved, including Transportation, Housing and Urban Development (THUD). If negotiations extend beyond the deadline, Congress may rely on additional continuing resolutions for some agencies.
For affordable housing, the stakes in the THUD bill are high. Both the House and Senate proposals would continue funding for Housing Choice Vouchers and Community Development Block Grants, but they take sharply different positions on the HOME Investment Partnerships Program. The House bill would eliminate HOME entirely, while the Senate maintains funding. If final negotiations result in flat funding through a continuing resolution, rising costs would effectively reduce program capacity—limiting the number of projects and households HUD programs can support even without formal cuts.
Tax Policy and the AHCIA
Alongside appropriations and housing authorization efforts, advocates continue to take a long-term, strategic approach to tax policy through the Affordable Housing Credit Improvement Act. With many AHCIA provisions already enacted in recent legislation, the focus has shifted toward refining a smaller set of remaining priorities that command broad bipartisan support.
Rather than pressing for immediate movement, stakeholders are prioritizing readiness—keeping the framework closely aligned with prior versions so cosponsorship can be rebuilt efficiently and the bill is positioned to advance if a viable tax vehicle emerges.
Signals from the Trump Administration
The administration is also expected to announce executive actions related to housing affordability in the near term. Public statements have pointed to potential limits on institutional single-family rental acquisitions and an emphasis on accelerating “shovel-ready” housing supply. While details remain limited, the increased attention reinforces what is already evident on Capitol Hill: housing is no longer a secondary issue, and federal policy decisions in 2026 will have meaningful implications for housing production and financing nationwide.