House Financial Services hearing spotlights housing supply shortfall, debates regulation vs. funding

WASHINGTON — Members of the House Financial Services Committee heard sharply different prescriptions on how to ease the nation’s housing crunch at a full‑committee hearing on “Building Capacity, Reducing Government Roadblocks to Housing Supply.” Witnesses from industry and advocacy groups described a nationwide shortfall in housing, debated whether federal intervention should be outcome‑based incentives or expanded spending, and flagged practical barriers that slow or stop projects.

The hearing, convened by Chair Hill and led in part by subcommittee chair Mike Flood, centered on what witnesses called a prolonged period of underbuilding and the costs imposed by local, state and federal rules. Flood opened the hearing by citing a persistent national shortage, noting: “We have a 5,000,000 unit shortage.” Kevin Sears, president of the National Association of Realtors, said the shortage and decades of underproduction have made entry to homeownership difficult and argued for reforms that would unlock existing homes and modernize tax rules: “Our nation has a severe lack of housing supply,” Sears testified.

Why it matters: Committee members and witnesses agreed on the problem but diverged on solutions. Industry witnesses emphasized easing regulatory burdens, streamlining permitting and incentivizing state and local zoning reform to lower per‑unit development costs and speed construction. Housing advocates and Democrats pressed for substantial federal funding and stronger enforcement of civil rights protections to ensure investments reach underserved communities.

What the witnesses said: Julie Smith of the Bizzuto Group, speaking for the National Multifamily Housing Council and the National Apartment Association, said regulatory and soft‑costs are a major portion of development expenses for multifamily housing and urged faster, more predictable approval processes. AEI Housing Center co‑director Tobias Peter called for federal outcome payments to states that adopt smaller lot sizes and other pro‑supply reforms while warning against federal micromanagement of local zoning.

Fair housing and enforcement: Nikitra Bailey of the National Fair Housing Alliance warned that recent administration actions have weakened enforcement of fair housing rules and urged congressional oversight. Bailey said rollback of the Affirmatively Furthering Fair Housing implementation and limits on special‑purpose credit programs risk reversing gains in homeownership for communities of color.

Policy specifics discussed: Members and witnesses reviewed several bills and ideas already before Congress, including the Home Reform Act of 2025, the Road to Housing package, and proposals to revise FHA and other program limits to expand access to financing and ADU construction. Several members pressed witnesses on the effect of tariffs and the Build America Buy America requirement on material and administrative costs for federally assisted housing projects.

Exchanges to watch: Republicans on the panel repeatedly emphasized regulatory red tape and capital constraints, arguing that streamlining permitting and revising zoning would free private capital and accelerate construction. Democrats and housing advocates countered that supply‑side reforms alone will not address deep affordability gaps for extremely low‑income households and that sustained federal funding and enforcement are necessary to prevent displacement and sustain fair access.

Next steps: Chair and subcommittee leaders said they will move toward markups later this month on a package that includes permitting, manufactured housing, and other pro‑supply measures; witnesses were asked to submit additional materials for the record and respond to follow‑up questions.