2025 was a banner year for housing reformers. States and localities across the United States adopted more new laws and policies focused on promoting housing supply growth than in any previous year in more than five decades. This burst of pro-housing reform is likely to accelerate home production and promote affordability. More states and cities should get on board.
Localities lead
Bad local policies constitute the largest obstacle to new housing supply in most parts of the United States, so it’s good news that cities are leading the charge for pro-housing reforms.
The most popular reform during 2025 has been reducing parking space requirements in new apartment buildings. Denver, Colorado, eliminated all parking mandates, allowing the market to determine how many spots to build in new multifamily developments. New York, New York, and Dallas, Texas, ended requirements in core areas and adjacent to public transit stops and reduced them elsewhere. These cities joined a growing group of parking reformers: Authorities have ended parking requirements in Austin, Texas; Buffalo, New York; Minneapolis, Minnesota; Portland, Oregon; San Francisco, California; San Jose, California; and many suburban cities.
Each unneeded parking spot that doesn’t get built will remove $30,000 to $60,000 from the per-unit construction cost of new buildings, resulting in more development.
Some cities loosened rules governing the size of buildings allowed on a given lot during 2025. San Diego, California, for instance, allowed greater floor area per square foot of lot for apartment buildings, provided a developer reserves a portion of new units for lower-income renters.
Several cities launched new initiatives to promote new housing development on publicly owned land, particularly near transit stops. Dallas Area Rapid Transit started working with developers on several sites the authority owns. Denver and Phoenix, Arizona, are planning developments as well.
The year saw a surge in office-to-residential conversions, with cities waiving complex rules that otherwise would have delayed efforts to repurpose under-utilized downtown office towers. Leading cities for conversions underway include New York; Washington, D.C.; Dallas, and Atlanta, Georgia.
Cities also saw significant new development as a result of policies passed in recent years. Miami, Florida, has more than 20,000 apartments under construction in commercially zoned areas as a result of Florida’s 2023 Live Local Act, which requires cities to allow such development provided developers satisfy state affordability rules. Allowing apartments in commercial areas could add some 4% to 5% to the housing stock in most cities over the next 20 years, a 2025 George W. Bush Institute-SMU Economic Growth Initiative report shows.
In Texas, Houston and Austin saw substantial development of townhomes and small detached houses that became legal when those cities reformed rules to allow developers to subdivide a land parcel into smaller lots than most cities permit. Houston today has at least 40,000 more homes than it otherwise would because of its reforms, which it launched in 1998. Homes made possible by this reform sell for 37% less than other Houston single-family homes, Pew Research has shown.
Some cities, moreover, backed away from counterproductive policies in 2025. New Orleans’ planning commission recommended rescinding a policy that requires developers to reserve units for low-income households in any new development in or near downtown. The city’s “mandatory inclusionary zoning (MIZ)” policy has caused a significant decline in new construction. MIZ requirements amount to a tax on new development and have generally impeded housing production in most places that have tried them, the Bush Institute-SMU report shows.
States jump on board, too
States passed more than 100 pro-housing laws in 2025, according to Pew data. This compares with an average of 48 per year in 2023 and 2024, 18 per year between 2017 and 2022, and one per year from 2011 to 2016. The rising assertiveness of state governments on housing challenges is new. Most states largely deferred to localities on housing and land-use policies until the 2020s.
State legislatures passed a wide range of reforms:
- Requiring localities to allow apartments in commercially zoned areas: Texas and Maine passed legislation allowing multifamily development in most commercial areas in large to midsized cities. Arizona and Connecticut took partial steps in this direction. These states follow in the footsteps of Florida and Montana, which both passed sweeping reforms in 2023.
- Requiring localities to allow apartments near transit stops: California and Washington state passed rules that will allow larger multifamily structures across thousands of locations with good access to bus and train routes.
- Allowing developers to build small starter homes on small lots: Texas passed legislation requiring large and midsized cities – amounting to one-third of the state’s population – to allow subdividing large land parcels into lots as small as 3,000 square feet. Maine passed a modestly less aggressive reform, while Washington simplified the process for splitting a lot into smaller pieces.
- Reducing parking requirements: Connecticut, Montana, Texas, and Washington all passed laws eliminating parking spot requirements for some kinds of new development.
- Allowing developers to build small apartment buildings with a single staircase: Montana and Texas made it legal to build structures up to six stories tall with a single staircase, following the example of Tennessee, which passed a similar measure in 2024. Pew Research shows that single-staircase buildings are just as safe as buildings with two staircases, which most cities still require. This reform frees up space for at least one additional apartment on each floor of a building.
- Promoting new cost-saving construction technologies: Montana made high-quality manufactured homes – structures built in a factory and delivered to a site – equivalent to site-built houses for zoning purposes. Kentucky required localities to allow manufactured housing that satisfies federal building standards established by the U.S. Department of Housing and Urban Development.
- Streamlining local permitting processes: Texas made it harder for small minorities of neighbors to block zoning changes nearby. California exempted some multifamily development in urban areas from the onerous requirements of the California Environmental Quality Act, which development opponents have used to block housing for decades. Arizona required cities to establish a set of preapproved building designs to reduce approval times and allowed “third-party review” of building applications, meaning qualified third-party entities – and not just city permitting offices – can issue permits. Tennessee and Texas have allowed third-party review for the past two years.
In all these cases, states have preempted the authority of city governments, inevitably triggering controversies over local control. Local control is a valuable tradition that allows cities to adapt rules to local conditions, but states must balance its benefits against their needs for drastic acceleration of housing production. Texas and other states have moved to the forefront of housing reform because they recognize that their future growth and prosperity will depend on building ample housing supply and restoring reasonable affordability for residents.
Federal lawmakers move the ball forward but haven’t reached the end zone
The U.S. Senate passed a bipartisan bill called ROAD to Housing, which contains 40 relatively modest reforms that collectively would have been helpful to state and local efforts. But the House of Representatives declined to take up the Senate’s bill during 2025. House leaders are optimistic that some of the measures embodied in the bill will advance in 2026.
Steps backward
While 2025 brought many pro-housing reforms, some states and cities adopted policies that will likely impede housing production. Washington imposed statewide rent control on apartments, following recent moves by California and Oregon. New York City and Los Angeles expanded longstanding rent control systems. Rent control measures – if they are strict enough to meaningfully help existing renters – create strong disincentives for developers and tend to reduce construction, abundant evidence shows. St. Paul, Minnesota, and Montgomery County, Maryland, have recently experienced dramatic declines in housing production immediately after enacting tough rent control rules, as did Oregon.
Housing production helps
The past year also brought new evidence that cities seeing large growth in housing supply can, as a result, experience significant improvements in housing affordability. Rents in Austin have declined by more than a fifth relative to people’s incomes over the past three years because of the Austin metro area’s enormous building boom. Most large Sun Belt metros – which enjoy more growth friendly housing policies than peers elsewhere in the United States, as the Bush Institute-SMU report shows – have seen home price declines as well.
Price declines partially reflect the downward effect of relatively high mortgage interest rates since 2022. But larger-than-average drops in cities and metros with the most pro-housing policies confirm that the kinds of reforms many cities and states pursued in 2025 make a real difference.
A New Year’s wish: May America’s housing reform movement gather even more momentum across the country in 2026.
