New Report Shows Housing Reform Is Gaining Momentum Nationwide

Forbes

05-08-2025

Housing is too expensive in America, primarily because we do not build enough of it in the places people want to live due to zoning and other land-use regulations. Through education and advocacy, YIMBY groups (Yes In My Backyard) have convinced many state legislators that the best way to make housing cheaper is to reform regulations so developers can build more of it, and legislators across the country are acting. In a new policy brief from the Mercatus Center at George Mason University, Salim Furth and Eli Kahn report that 123 bills that make it easier to build housing were passed between July 2024 and June 2025.
The United States lacks somewhere between 1.5 million and 4.5 million homes, which is pushing up housing prices nationwide. As of June, the median price of a home in America is $435,300, a record high. Meanwhile, median household income is $80,610. These numbers create a medina-home-price-to-income ratio of 5.4, which is outside the generally accepted affordability range of three to four.
States are responding by passing laws that make it easier and cheaper to build more housing. As the map below shows, more than half the states enacted at least one housing supply bill over the last year. Washington, California, Montana, Texas, and Maine each enacted a major housing supply package. Texas in particular was a leader in 2025, passing several laws that will lower the cost of housing, including reducing minimum lot sizes; making it easier to convert office buildings to residential units; and allowing developers to construct multifamily buildings with a single staircase to reduces construction costs. Texas is often a bellwether for Red states, so hopefully its willingness to embrace pro-housing policies sets an example other Republican-controlled states follow.
The legislative session from January to June of this year was the most successful one yet for pro-housing policies. As the table below shows, 102 bills passed in the most recent session, compared to only 30 over the same months in 2023. A few Midwestern states contributed to the increase in housing legislation by taking their first steps to address affordability concerns. Iowa passed a strong ADU law and Indiana put several pro-housing reforms on its list of things local governments can do to maintain eligibility for certain state funding.
Other states built on earlier reform efforts to enact major pro-housing policies. Maine passed a bill that caps minimum lot sizes at 5,000 square feet for lots with sewer access; allows at least three homes on such lots; and caps lot sizes at 20,000 square feet for lots with septic tanks. The state also enacted laws that remove redundant environmental approvals, limit parking minimums, and restrict impact fees.
Speaking of parking minimums, parking reforms were a big winner in 2025. Parking requirements raise costs by forcing developers to build parking spaces that residents do not need or want. Surface parking spaces can cost as much as $10,000 per space in areas with high land prices, while spaces in parking garages can cost as much as $50,000 each. These costs are passed on to consumers in the form of higher rent and housing prices. According to the Mercatus report, Washington eliminated most local parking minimums while Montana eliminated them for homes up to 1,200 square feet. New Hampshire, Texas, and Florida also made changes to parking requirements that will give developers more flexibility.
California contains many of the most expensive housing markets in America despite passing a variety of housing bills over the last few years. This year, the state may have finally turned the corner, as several of its new housing laws should have a bigger impact than the more modest changes enacted previously. One new law exempts most infill development from the state's California Environmental Quality Act (CEQA). CEQA requires builders to follow a long and expensive process to get permission to build and creates several opportunities for housing opponents to use litigation to delay or cancel projects. Exempting infill projects should speed up the building process and reduce the cost of new construction. California also strengthened protections for ADUs and housing built on faith-based or other non-profit land, along with some other pro-housing changes. And the Golden State may not be done: The Mercatus report notes that the legislature is still considering a bill that would allow apartment buildings near transit across the state.
Some of the biggest pro-housing wins result from policies that are not enacted. In recent years policymakers on both sides of the aisle have blamed institutional investors for high housing prices. As they tell it, investment companies such as Blackstone outspend normal families for houses and then turn those houses into rentals. The result is that fewer houses are available for purchase, which pushes up prices.
While it is true that Blackstone and similar companies buy houses, their share of the market is small. Institutional investors only own about 4% of all single-family rental units and less than 1% of all single-family homes. They are not the reason supply is limited. In fact, a new study by Konhee Chang of the University of California at Berkley provides evidence that large-scale landlords increase the rental supply, which reduces rents and expands access to high-amenity neighborhoods.
Despite the popularity of blaming big investors, no state has passed a bill that would curtail their ability to purchase real estate. This is smart. Instead, state lawmakers who want to improve housing affordability continue to focus on reforming the things that matter such as minimum lot sizes, parking requirements, and other regulations that increase costs.
The last year was a big one for housing reform. More than 30 states passed at least one pro-housing bill between July 2024 and June 2025. America still has a housing problem and there is more work to be done, but the policy environment is improving. Hopefully, there will be more progress in 2026.