The U.S. Department of Housing and Urban Development released its latest research on strategies being pursued by state and local governments to remove regulatory barriers to affordable housing and increase housing supply.

Earlier this month, the Biden-Harris Administration announced steps that it said will create, preserve and sell to homeowners and non-profits nearly 100,000 additional affordable homes for homeowners and renters over the next three years. 

According to the research, while home production has recently been on the rise, building permits, one indicator of new housing supply, remain below historical averages and far below the level needed to eliminate the deficit in housing.

“This research is a testament to the Biden-Harris Administration’s commitment to increasing and preserving our nation’s affordable housing supply,” Secretary Marcia L. Fudge said. “The research makes clear that there is bipartisan support for state and local reform to improve housing affordability and underscores how the President’s Build Back Better Agenda would strengthen the federal government’s capacity to help jurisdictions meet the housing needs of their residents. HUD and the Administration will remain hard at work to build inclusive, equitable communities through affordable housing.”

According to HUD, the lessons from the research “. . .will also inform the locally driven zoning reform initiative in the President’s Build Back Better Plan." 

Currently, Congress is working toward passing the Build Back Better Agenda, which includes an investment in building new homes and making existing housing safer, healthier, and more energy-efficient, according to the White House. 

According to this new research, without significant new supply, cost burdens are likely to increase as current home prices reach all-time highs, with the median home sales price reaching nearly $375,000 in July 2021. 

More than 37 million renter and owner households spent more than 30% of their income on housing in 2019, according to the Joint Center for Housing Studies of Harvard University's 2020 State of the Nation's Housing report. 

By December of 2020, there were just 1.03 million homes for sale, according to Daniel McCue, a senior research associate for JCHS. 

Additionally, McCue noted, since mid-2020, home prices have been rising at an accelerating pace—in the first quarter of 2021, home prices were up by double digits in 85 of the 100 large markets.

The new HUD research cites two reports—a HUD-published report from January 2021 under the previous administration and a June 2021 report to Congress—that highlight actions state and local governments are taking to reduce barriers that are limiting housing production and preservation. 

These activities range from state tax policies and incentives to encourage local housing production to local zoning changes, process improvements, and community engagement reforms.

Additionally, the research highlights HUD tools and grant opportunities to assist jurisdictions seeking to increase the supply of affordable housing in their communities, and makes clear that “a comprehensive zoning reform program, such as the one proposed in the Build Back Better Plan currently before Congress, would enhance HUD’s efforts to help communities plan and implement housing policy reforms, study the impact of those reforms, and share the most effective approaches to community engagement and policy actions."

According to the White House, President Biden is "committed to using every tool available in government to produce more affordable housing supply as quickly as possible and to make supply available to families in need of affordable, quality housing—rather than to large investors." One out of every six homes purchased in the second quarter of 2021 was acquired by investors, the White House said. 

The White House said federal agencies will boost the supply of quality, affordable rental units by relaunching the partnership between the Department of Treasury’s Federal Financing Bank and HUD Risk Sharing Program to enable eligible state housing finance agencies to provide low-cost capital for affordable housing development.

The White House also said federal agencies will make more single-family homes available to individuals, families, and non-profit organizations—rather than large investors—by prioritizing homeownership and limiting the sale to large investors of certain FHA-insured and HUD-owned properties.

"The large and long-standing gap between the supply and demand of affordable homes for both renters and homeowners makes it harder for families to buy their first home and drives up the cost of rent," the White House said.

The new research was published by HUD’s Office of Policy Development & Research (PD&R).