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NCSHA Washington Report | May 29, 2026

Published on May 29, 2026

NCSHA Washington Report - 2025Several years of advocacy, across two presidential administrations, may be starting to move HUD to fix its dysfunctional implementation of “domestic sourcing” requirements imposed on agency-funded housing development in the 2021 infrastructure bill.

That law’s “Build America, Buy America” provisions extended mandates that massive federally funded rail, airport, and highway projects be built with goods primarily manufactured in the U.S. to affordable housing projects with as few as five units. But many manufactured components of them — appliances, lighting fixtures, elevators, HVAC systems — aren’t widely made here, and it will take a while until they can be.

The impacts were minimal in the period immediately after the law passed, because the Biden Administration’s HUD exercised its authority to waive the most onerous of the mandates. But it mostly stopped doing that in August 2024, and HUD under the Trump Administration has done little to improve things.

As a result, a growing number of housing developments across the country are dealing with unforeseen cost increases and stalling out while builders wait on HUD for relief. “HUD is taking at least six months to approve many waivers,” according to a recent report from the Associated Press.

NCSHA, the National Association of Home Builders, the National Housing & Redevelopment Association, and others have been urging HUD to fix its process and asking Congress to weigh in. The message appears to be getting through.

Testifying recently before the key Senate committee that funds his agency, HUD Secretary Scott Turner heard from Senator Susan Collins (R-ME) — the Senate’s top appropriator — that “[i]t feels like HUD’s waiver process for BABA is the black hole where affordable housing dies,” and from Senator Cindy Hyde-Smith (R-MS) that HUD’s “BABA waiver process needs to be clarified and it needs to be improved.”

The Secretary responded, “Our team has been working very intentionally and hard every day to make sure we can streamline this process, and we’re happy to take your input, as I’m here today, to listen to your input and work with you and your office and members of this committee.”

On the other side of Capitol Hill, Representative Mike Flood (R-NE), one of the House’s top housing policymakers, has been pushing legislative ideas to further relieve builders from the crippling cost increases the broken BABA process is causing. Some of what he wants to do is in the big housing policy bill the House passed earlier this month.

Few housing issues have such broad-based support as BABA reform. Nearly 100 companies and associations have endorsed a set of steps HUD and the White House can implement right away. Labor unions representing millions of workers — arguably the most ardent made-in-America constituency — have joined the cause, calling on HUD to “adopt a more targeted, transparent, and predictable waiver process that ensures timely project delivery while supporting the domestic manufacturing goals.”

Advocacy appears to be reaching the key decision-makers. It needs to continue. Meanwhile, for anyone interested in learning how HUD’s process operates today and how to navigate its most problematic features, NCSHA is hosting a webinar June 18.

Stockton-Williams-Washington-ReportStockton Williams | Executive Director

Washington Report will return June 12.

In This Issue

Remembering Longtime NCSHA Leader, Advocate Lynn Luallen
Founding director of the Kentucky Housing Corporation (KHC) and two-time NCSHA Board President F. Lynn Luallen passed away earlier this month at age 88. Luallen served four separate terms as KHC chief executive under four governors. During his tenure, KHC became a self-supporting agency, hosted the first Kentucky Affordable Housing Conference, and assisted its 50,000th homeowner, among other accomplishments. “Lynn devoted his career to making Kentucky a better place to live,” KHC Executive Director and CEO Winston Miller said in the Northern Kentucky Tribune. “He thought globally about local challenges, always searching for new ways KHC could enhance its programs and offerings to expand affordable housing and strengthen communities across the Commonwealth.” Read more about Luallen’s remarkable career in and contributions to affordable housing here.

NCSHA Submits Recommendations for IRS/Treasury 2026 – 27 Priority Guidance Plan
This week, NCSHA sent the U.S. Department of the Treasury and Internal Revenue Service (IRS) comments encouraging them to include guidance issues related to the Housing Credit and Housing Bonds in their 2026 – 27 Priority Guidance Plan. The plan is an annual document that identifies the guidance projects Treasury and IRS will work on during the 12-month period beginning July 1 and ending June 30.

NCSHA’s letter urges IRS and Treasury to ensure the Housing Credit and U.S. Department of Housing and Urban Development (HUD) programs are aligned in regard to HUD’s implementation of the Housing Opportunities Through Modernization Act and National Standards for the Physical Inspection of Real Estate, provide clarification related to nonprofit right of first refusal, issue guidance on application of the Violence Against Women Act to the Housing Credit, finalize pending guidance related to compliance monitoring and the Audit Technique Guide for Completing Form 8823, and take other actions to improve the ongoing administration of the Housing Credit program.

The letter also asks IRS to update its guidance for verifying first-time home buyer status, allow more flexible use of carryforward private activity bond authority for affordable housing, adjust record retention requirements for bonds, amend existing regulations to change how mortgage fees are considered when calculating a Mortgage Revenue Bond mortgage’s effective interest rate, and amend the Yield and Valuation of Purpose Investment regulations to address covered investments.

House Passes Revised Housing Bill with Administration Support
On May 20, the House of Representatives passed the 21st Century ROAD to Housing Act (H.R. 6644) after making adjustments to the legislative text requested by the White House. The updated text more closely resembles the Senate-passed version of the legislation but, unlike the Senate bill, does not require institutional investor owners of built-to-rent properties to sell those properties within seven years of purchase. The White House issued a Statement of Administration Policy in support of the revised version. The Senate must now either take up the House bill or continue negotiations so that it may advance a final version of the legislation.

While the updated text removed an explicit exemption for Low-Income Housing Tax Credit (Housing Credit) developments from the institutional investor purchase ban included in a previous version of the House’s legislative text, such an exception is not needed as the House bill does not impose a seven-year disposition requirement and other exceptions to the investor purchase ban would cover the Housing Credit.

The bill includes numerous NCSHA priorities, including reforms to strengthen the HOME Investment Partnerships Program, including a directive to the HUD Secretary to review and revise Build America, Buy America guidance as it relates to HOME; an increase in the public welfare investment cap allowing banks to increase equity investments in Housing Credit developments; streamlining changes to the environmental review process; and enactment of a competitive pilot program to finance home repairs.

For more information, see NCSHA’s blog.

Appropriations Subcommittee Passes HUD Funding Bill
Last Thursday, the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies voted to advance the Fiscal Year 2027 Transportation, Housing and Urban Development, and Related Agencies Appropriations Bill. The House Appropriations Committee is scheduled to vote on the bill on June 3 (previously scheduled for June 4). The bill would provide $71.377 billion in discretionary funding, a nearly $6 billion or eight percent decrease from FY26 enacted funding levels.

For more information on program funding within the bill, see NCSHA’s blog and budget chart.

HUD Announces Phase-Out of Restore-Rebuild Public Housing Construction Program
On May 12, HUD informed public housing authorities (PHAs) of its plans to end the Rental Assistance Demonstration (RAD) Restore-Rebuild Initiative, formerly known as “Faircloth to RAD,” which enables financing for new public housing construction through a conditional pre-approval for converting the public housing to Section 8 RAD contracts.

HUD will continue to process applications underway for a limited time before the program is scheduled to end. For PHAs that have not yet requested a Notice of Anticipated RAD Rents to begin the process, no new requests will be accepted. This means the ability to build and redevelop public housing will be significantly limited in many areas.

OMB Proposes Overhaul of Guidance for Federal Financial Assistance
Today, the Office of Management and Budget (OMB) published a proposed rule to revise its guidance related to the management of grants, cooperative agreements, and other forms of federal financial assistance by making wide-ranging modifications to its “Uniform Guidance” (2 CFR part 200). OMB’s stated goals are to improve transparency, accountability, and oversight of awards across federal agencies, including at HUD, Treasury, and the U.S. Department of Agriculture; clarify OMB’s statutory authority to provide direction and leadership to federal agencies on financial management matters; and reduce recipient burden. A major focus of the overhaul is to institutionalize reforms to the federal grantmaking process to address what the administration believes to be unlawful discrimination, such as policies that focused on certain identity groups over others, consistent with Executive Order 14322, Improving Oversight of Federal Grantmaking, issued last August.

Among the many reforms proposed are changes to the process of federal agency review of merit proposals, such as the implementation of pre-issuance reviews conducted by senior appointees to ensure all discretionary awards advance the president’s policy priorities; expansion of the list of factors agencies may consider when evaluating applicant risk, such as an applicant’s “history of questionable practices;” and required inclusion of termination provisions in each federal award, including termination based on the discretion of the applicable federal agency, and mid-award termination, which the proposed rule argues allows agencies to “respond to changing circumstances, priorities or knowledge.”

Comments are due to OMB by July 13. Please provide feedback to Garth Rieman by June 30 to inform NCSHA’s comments. OMB intends to finalize the rule and make it effective by October 1 to ensure its applicability to all federal awards made during fiscal year 2027.

Environmental Reviews for Large Developments Shortened by HUD Interim Rule
HUD published an interim final rule last Friday that removes a requirement for multifamily projects of 200 or more units to send environmental reviews to the Field Environmental Clearance Office (FECO) or Program Environmental Clearance Office (PECO). HUD believes this requirement is duplicative, as these projects have gone through two rounds of environmental reviews before documentation is sent to FECO or PECO, and the additional step in the approval process can add to processing times for these developments which often have tight closing deadlines.

The rule aligns with broader administration efforts to streamline housing development and accelerate permitting processes, including implementation of President Trump’s executive order directing federal agencies to simplify environmental review procedures. The interim final rule goes into effect June 2. HUD is accepting comments through July 21.

State and Local Government Housing Construction Best Practices Published
HUD, in coordination with the White House, published last week a series of suggested best practices for state and local governments to facilitate additional home construction. The release implements an executive order President Trump signed in March directing federal agencies to develop such practices. HUD sorts the suggested best practices into three broad categories: reducing construction costs, increasing the supply of land available for housing, and streamlining application and permitting requirements to allow for housing to be built more quickly.

The administration argues a common element in all three categories is that state and local governments can better utilize technology to reduce regulatory barriers and make home construction more affordable. None of the suggested best practices are binding on any governmental participants in HUD programs.

HUD Removes Protections for Emotional Support Animals
HUD issued an enforcement guidance memo last Friday cancelling its prior guidance covering emotional support animals (ESAs) with immediate effect and instructed HUD staff to stop pursuing fair housing complaints from tenants regarding ESAs that have not been trained to perform disability-related work tasks. HUD’s previous guidance instructed landlords to treat ESAs as assistance animals and generally not to charge pet fees or deny housing based on ESA ownership. HUD now has adopted the Americans with Disabilities Act (ADA) standard for trained service animals when deciding whether to pursue fair housing complaints regarding assistance animals, which requires an animal be trained to do work or perform tasks for the benefit of a person with a disability.

The memo states HUD’s underlying regulations governing assistance animals have not been updated in 35 years and HUD intends to go through a formal rulemaking process in the future to update its policy.

NCSHA in the News
Hoodline, 5.17.26, State Housing Playbook Arms Tennessee Cities in Fight Over Home Shortage

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