September 16, 2026
Author: Austin Bates (Public Policy Analyst, AZHC)
The Bottom Line Up Front
Arizona has made some progress on housing but has not produced enough homes at the prices Arizonans can afford to bring down the cost of housing for most people.
The newly enacted 21st Century ROAD to Housing Act gives Arizonans another set of tools to address the housing crisis, but will not solve Arizona’s housing shortage by itself.
Much of the work depends on Congress’s ability to work together to fund the newly authorized programs, HUD’s ability to implement programs, state and local policy changes, and Arizona’s willingness to compete for the new tools Congress has made available.
What is the 21st Century ROAD to Housing Act?
The 21st Century ROAD to Housing Act is one of the broadest federal housing packages passed in decades. The bill became law on July 11, 2026, after passing out of both chambers with bipartisan support. Instead of relying on one major program, it approaches housing from several directions: construction, preservation, land use, permitting, manufactured housing, homeownership, rural housing, urban infill, homelessness programs, lending, and many changes to federal regulations and guidelines.
The law does not provide any new funding, so Congress will have to appropriate dollars to programs before state and local governments can take advantage of all the provisions. To read a summary of each provision within the 21st Century ROAD to Housing Act, click here.
Arizona’s Housing Crisis
ARCHES’ 2026 State of Housing report shows that housing is a major driver of the overall cost of living in Arizona. Data from the report also shows that, in 2024, nearly a quarter of Arizona homeowners spent 30% or more of their income on housing. The same trend is true for renters. Since 2010, the cost of rent in Arizona has risen faster than income, so it should be no surprise that in 2024, over half of all renters spent 30% or more of their income on housing. In recent years, whether you are a homeowner or renter, Arizona has become less affordable to live in.
The Supply Gap
One of the main reasons for Arizona’s rapid increase in housing prices is our supply gap. Different reports list Arizona’s supply gap anywhere between 55,000 to 195,000 units. Much of our current supply problem goes back to the years following the Great Recession. In the mid 2010s, our population growth rate began to increase at a faster rate than our home building growth rate. By the time we experienced our population boom in the late 2010s and early 2020s, our home-building market was far behind, to the point that by the end of 2022, years of explosive population growth, limited new housing development, and national interest from institutional investors, culminated in a housing market that many Arizonans were not prepared to face.
Progress Made
The good news is that Arizona is building again. The same ARCHES’ 2026 State of Housing report found that since 2021, we have substantially increased the numbers of homes we are annually building compared to the previous decade.
Recent state and local policy changes have also begun addressing some of the barriers to producing new housing supply. Cities are building new market rate rental units, exploring ways to build new infrastructure for more housing, and redeveloping unused properties. Property owners and developers are building more and different types of housing, such as casitas, townhomes, duplexes, and fourplexes, ensuring that we have a diverse supply for different needs. Lastly, public-private partnerships are forming to identify ways to speed up permitting and project timelines.
Unfortunately, even with more construction and stronger public-private coordination, ARCHES found that housing shortages remain and that the cost of becoming a homeowner continues to rise. Inflation-adjusted Arizona home values increased 66% from 2014 to 2025. That’s good for homeowners that can afford their homes, but challenging for everyone else that is competing for the same limited supply.
How Can the 21st Century ROAD to Housing Act Help?
The new law gives Arizona a toolbox for solving the housing crisis. Within the toolbox, there are brand new tools, updated old tools, and papers explaining all the changes in rules and regulations for building, preserving, buying, and financing housing in the United States. Not all of the law’s tools will be immediately accessible. It will take time for HUD and other federal agencies to develop policies and procedures for all the law’s provisions, and Congress will have to allocate funding for newly authorized programs for them to make an impact.
Arizona should spend the next few months going through the toolbox, assessing which tools fit where, preparing for regulatory changes, and working with our Members of Congress to advocate for more investments in the tools that will help us build out our housing supply.
Pilot Programs to Build New Supply
Many provisions within the 21st Century ROAD to Housing Act could help Arizona address our supply gap.
- The RESIDE Act (Revitalizing Empty Structures Into Desirable Environments) helps communities convert vacant and abandoned properties into housing.
- The Accelerating Home Building Act supports communities developing pre-reviewed housing designs. Instead of requiring the same design to go through the same review process every time, communities could approve designs in advance and shorten the development process. The City of Maricopa has already implemented such a program.
- The Innovation Fund creates a competitive grant program for eligible communities that show improvements in their housing supply. Grants can support housing and infrastructure, with awards ranging from $250,000 to $10 million. Congress authorized $200 million annually for fiscal years 2027 through 2031, although actual funding will depend on the upcoming appropriations processes.
The 21st Century ROAD to Housing Act makes it clear that Congress understands that different communities have different needs. The law has over 50 provisions that touch on building new homes, rehabilitating existing homes, renters, homebuyers, lenders, land use, and many more housing related subjects. A good toolbox allows you to access the right tool for the right problem. Using the tools from the 21st Century ROAD to Housing Act, Arizona can test different approaches across the state, identify which tool works best for each situation, and invest in the solutions that work.
Changes to the Community Development Block Grant
Two community development block grant (CDBG) changes deserve Arizona’s special attention.
- Section 204, titled the Addition of Affordable Housing Construction as an Eligible Activity, allows communities to use up to 20% of their allocated CDBG funding for new affordable housing construction.
- Section 213, titled the Build Now Act, creates a financial incentive that ties CDBG funding to housing production.
- Not all Arizona cities and counties will be impacted by Section 213. Moving forward, HUD will assess the housing growth rate changes of eligible cities and urban counties and compare them to the housing growth rate changes of other eligible cities and urban counties across the country. If they perform below the average growth rate of eligible CDBG recipients, the city or urban county will lose 10% of their CDBG funding. If they perform at or above the average growth rate, they will receive bonus funding that comes from the lost CDBG dollars of low performing recipients.
The law contains exceptions for certain jurisdictions. For more information, click here.
New Restrictions for Institutional Investors
Section 1001 addresses a major concern of many voters across the United States. The law prohibits a large institutional investor with investment control over at least 350 single-family homes from purchasing additional covered single-family homes. The law does not require an investor that already owns more than 350 homes to sell those properties.
There are significant exceptions: new construction, qualifying build-to-rent projects, certain renovate-to-rent projects, and specified homeownership programs are some examples of the exceptions. The law also establishes reporting requirements and a new HUD resource for tenants of covered institutional landlords. Violations can carry penalties of up to $1 million per violation or three times the purchase price.
What’s Next?
The 21st Century ROAD to Housing Act will influence federal, state, and local government action for years to come. To implement the act, HUD and other federal agencies must write new rules, policies, and procedures. To fund these programs, Congress must determine which programs to fund and how much to provide.
We must be prepared to advocate for federal rule changes and funding that gives us the tools we need to break through our housing crisis and build the homes we need to thrive. The Arizona Housing Coalition will be hosting complimentary webinars throughout Fall 2026 to help governments, community organizations, and the public understand the 21st Century ROAD to Housing Act. Click the button below to register for our first webinar on Wednesday, September 30 at 9:00am.