For homebuilders, the emerging opportunity is smarter delivery

While it is certainly good news that the 21st Century ROAD to Housing Act has now passed, it will take some time for its elements to meet pent-up demand. But what will likely separate homebuilding winners and laggards will be how well they respond to the specific gaps in the housing market and how effectively they communicate that to potential buyers.

According to the State of the Nation’s Housing 2026, recently updated by Harvard’s Joint Center for Housing Studies, the lock-in effect remains the defining feature of the resale market and has also encouraged builders to make up the inventory slack. With roughly half of all outstanding mortgages with rates below 4%, existing home sales sat at a three-decade low of 4.1 million in 2025 and more recent data shows little improvement through the first half of 2026.

This lack of inventory has kept new construction central to overall supply even as builders face their own headwinds. Construction input costs have climbed 40% since January 2020, while the median new single-family home price hit nearly $425,000 in May: a level unaffordable to the typical renter household. While builders are certainly not competing in an easy environment, the data points to several specific places where the opportunity is real and in some cases, soon supported by federal policy.

Understandably, builders have gravitated toward higher price points to offset rising land, labor and materials costs, but that has left the entry-level buyer increasingly underserved. The share of listings affordable to households earning $75,000 or less fell from 49% in March 2019 to just 23% by March 2026. An annual survey by the National Association of Realtors shows first-time buyers accounting for just 21% of all purchases, an all-time low, with a median first-time buyer age of 40, a full decade older than the historical norm.

Fortunately, the response from builders is already measurable in the completion data and not merely anecdotal.

Homes of under 1,800 square feet rose from 23% of single-family completions in 2022 to 32% in 2025, while 37% of new homes were built on lots less than 7,000 square feet, up 10% from 2014. Townhomes, which can offer some benefits of single-family privacy versus condominium flats, grew from 13% to 18% of completions over the same period. 

The ROAD to Housing Act further reinforces this shift. The Accelerating Home Building Act provides federal grants to local governments to help them streamline and expedite affordable housing construction by adopting pre-reviewed housing designs for ADUs, duplexes and townhouses. The goal is to speed up the entitlement time that has historically discouraged smaller-footprint projects, with a 10% set-aside reserved for rural markets. A new $200 million annual innovation fund rewards jurisdictions that streamline permitting and density bonuses. With implementation happening mostly at the local level, these carrots could prove helpful for jurisdictions far out of balance with pent-up housing needs.

While AI is promising, most adoption among top builders has gone toward sales and marketing rather than sourcing materials or on construction sites: Homebuilding productivity grew just 15% between 1993 and 2023 versus 49% for the broader economy.

The ROAD to Housing Act could provide much-needed tailwinds to close that gap.

Manufactured and modular housing occupy similar ground. Only 102,700 manufactured homes were built in 2025, barely a third of the annual average from the 1970s through the 1990s, even with cost and often build quality advantages over site-built products. 

The ROAD to Housing Act’s Title 3 removes several longstanding barriers. It eliminates the wildly outdated permanent chassis requirement, raises FHA-insured manufactured housing loan limits and directs the Department of Housing and Urban Development to identify and reduce financing obstacles facing modular developers. Could the simultaneous loosening in the regulatory and the financing environments for this segment lead to a revival?

As greenfield building sites tighten in many metros, a mix of infill sites, redevelopment parcels and public-private partnerships on underutilized government land are becoming more viable, aided by the Act’s streamlined NEPA review, its infill exemptions and a new RESIDE grant program for converting vacant commercial buildings to housing. 

Still, none of this changes the underlying math; depending on the estimate, the country still needs several hundred thousand to several million more units.

The builders best positioned through the rest of 2026 and beyond are unlikely to be the ones simply building more of the same. They’ll be the ones adjusting product mix, standard features, land strategy and financing to meet buyers where the data shows they are. But now they’ll have a federal policy environment actively pulling in the same direction.

By Patrick S. Duffy. He is a Principal for MetroIntelligence. He can be reached at pduffy@metrointel.com 

This is the full column, read the print version here.