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    Affordable housing explained: costs, supply and policy in 2026

    In US policy, housing counts as affordable if it costs no more than 30% of income; by that test 22.7 million renter households, about half, were cost burdened in 2024.[1][2] Governments are responding on two fronts: subsidies such as the expanded Low-Income Housing Tax Credit, and supply measures such as the 21st Century ROAD to Housing Act, which became law in July 2026.[3][4]

    Editor reviewedStrict sourcingUpdated ExplainerSocial welfare, Tech policy, Markets and trading

    “Affordable housing” can mean two things: housing that costs no more than 30% of a household’s income, and subsidised housing reserved for lower-income households.[1][5] This explainer covers both. It is the first page in a short course on housing costs, supply and assistance. It is not financial or legal advice; rules and figures change, so check official sources before making decisions.

    What “affordable” means

    The usual rule of thumb in US policy is that housing is affordable if it takes no more than 30% of your income. If you pay more, you are “cost burdened”. If you pay more than half, you are “severely cost burdened”.[1] In 2024, 22.7 million renter households, about half of all renters, were cost burdened, and so were 20.7 million homeowners.[2] For households earning under $30,000, two-thirds of renters were paying more than half their income for housing.[6]

    The 30% standard grew out of an old rule of “a week’s wages for a month’s rent”. It was written into federal rental assistance in the early 1980s, when tenant contributions rose from 25% to 30% of adjusted income.[7] Using the 2024 American Community Survey, CRS found that 49.4% of renter households and 23.9% of owner households were cost burdened, and that 26.2% of renters were severely cost burdened.[2] The renter share has stayed between 46.3% and 50.7% every year since 2006, so the problem is long-running.[8] The National Low Income Housing Coalition’s “Housing Wage” offers another measure: the hourly wage needed to rent a modest home at HUD’s Fair Market Rent for no more than 30% of income. In 2026 it was $34.73 for a two-bedroom.[9][10]

    The numbers are covered in depth in housing affordability data explained.

    Why housing got more expensive

    Prices and rents rose steadily in the decade before 2020, jumped during the pandemic, and remain well above pre-pandemic levels.[11] The median existing-home price was $414,300 in 2025, 21% above 2019 after inflation.[12] The median asking rent was $1,492, nearly 18% above 2019 after inflation.[13] Mortgage rates add to the cost of buying. Freddie Mac’s average 30-year rate was 7.40% in the week of October 8, 2026, up from 6.30% a year earlier.[14] For how central bank decisions feed into mortgage rates, see what a Fed rate change does to mortgages.

    Researchers disagree about how much of this is a national shortage of homes. CRS reports that many researchers see an aggregate shortage, while others say shortages are concentrated in particular markets or in housing for low-income renters.[15] Harvard’s Joint Center for Housing Studies says market forces alone are unlikely to meet the need for deeply affordable homes.[16] The competing views are set out in the housing supply and zoning debate.

    The main policy tools

    • Rental assistance. Housing Choice Vouchers (Section 8) and project-based assistance help about 4.5 million households. Funding covers an estimated one in four eligible families.[17]
    • Subsidised construction. The Low-Income Housing Tax Credit is the main federal subsidy for building affordable rentals. The 2025 reconciliation law expanded it from 2026.[5][3]
    • Supply rules. Zoning and land use rules are one of several factors researchers link to undersupply in some areas.[18] The ROAD to Housing Act and Executive Order 14394 both try to reduce regulatory barriers.[19][20]
    • Rent regulation. In June 2026, New York City’s Rent Guidelines Board froze rents on about 1 million stabilised apartments for leases starting from October 1.[21] The trade-offs are debated: a study of San Francisco found rent control protected sitting tenants but led landlords to cut rental supply by 15%.[22]

    For how to apply for help, see the rental and housing assistance guide.

    The 2025-2026 US laws

    The FY2025 reconciliation law permanently raised state Low-Income Housing Tax Credit allocations by 12% and made it easier to use 4% credits with bond financing.[3] The 21st Century ROAD to Housing Act became law without the President’s signature on July 11, 2026. The Senate approved the final compromise 85-5.[4] It merges the Senate’s ROAD to Housing Act with the House’s Housing for the 21st Century Act.[23] It lets CDBG funds pay for new housing construction, up to a limit, and reauthorizes the HOME program. It also creates grants meant to reward communities that cut regulatory barriers.[19] It bars companies owning at least 350 single-family homes from buying more, from January 7, 2027.[24] Most of its new grants still need funding from Congress.[25]

    The UK target

    The UK government aims to deliver 1.5 million net additional homes in England during this Parliament.[26] England added 208,600 net dwellings in 2024-25, 6% fewer than the year before.[27] An estimated 437,900 were delivered between 9 July 2024 and 20 September 2026, about 29% of the target. Full Fact rates the pledge as “appears off track”.[28] The 2025-26 figures are due in November 2026.[29]

    Next in the crash course

    Developing in World & Policy

    Questions readers ask

    What does "affordable housing" mean?

    Federal housing policy typically treats housing as affordable if it costs no more than 30% of a household's income. Households paying more are "cost burdened", and those paying more than half are "severely cost burdened".[1]

    How many Americans are cost burdened by housing?

    In 2024, 22.7 million renter households (49.4%) and 20.7 million owner households (23.9%) were cost burdened, according to Census survey data analysed by CRS.[2]

    What is the ROAD to Housing Act?

    The 21st Century ROAD to Housing Act (P.L. 119-101) is a wide-ranging housing law that became law without the President's signature on July 11, 2026. It authorizes grants to reward housing growth, lets CDBG funds pay for new construction, and bars large investors from buying more single-family homes.[4][19][24]

    Did the 2025 tax law expand affordable housing?

    It permanently raised states' Low-Income Housing Tax Credit allocations by 12% from 2026 and lowered the bond-financing test for 4% credits from 50% to 25%.[3]

    What are mortgage rates now?

    Freddie Mac's average 30-year fixed rate was 7.40% in the week of October 8, 2026, up from 6.30% a year earlier.[14]

    Is the UK on track for 1.5 million homes?

    An estimated 437,900 net additional homes were delivered in England between 9 July 2024 and 20 September 2026, about 29% of the target; Full Fact rates the pledge as "appears off track".[28]

    Sources

    · 29 claims from 12 publishers

    Each numbered claim is a statement we checked against the sources listed with it. Tap a number in the text to see its sources in place.

    1. [1]

      Federal housing policy typically treats housing as affordable if it costs no more than 30% of family income; households paying more are "cost burdened" and those paying more than half are "severely cost burdened". confirmedas of 2026-05-13

    2. [2]

      In 2024, 22.7 million renter households (49.4%) and 20.7 million owner households (23.9%) were cost burdened, and 26.2% of renter households were severely cost burdened. confirmedas of 2026-05-13

    3. [3]

      The 2025 reconciliation law (P.L. 119-21, the "One Big Beautiful Bill Act") permanently raised states' LIHTC allocation authority by 12% from 2026 and cut the tax-exempt bond financing test for 4% credits from 50% to 25%. confirmedas of 2026-09-25

    4. [4]

      The 21st Century ROAD to Housing Act (P.L. 119-101) became law without the President's signature on July 11, 2026, after passing both chambers with bipartisan support, including 85-5 in the Senate. confirmedas of 2026-09-17

    5. [5]

      The Low-Income Housing Tax Credit, created by the Tax Reform Act of 1986, is the federal government's primary tool for developing affordable rental housing; developers get credits in exchange for reserving rent-restricted units for lower-income households. confirmedas of 2025-07-11

    6. [6]

      Among households with incomes below $30,000 in 2024, 67.3% of renters and 57.1% of owners were severely cost burdened. confirmedas of 2026-05-13

    7. [7]

      The 30% standard grew out of the older idea of "a week's wages for a month's rent"; federal law capped public housing rents at 25% of income in 1969 and raised the share to 30% in the early 1980s. confirmedas of 2026-05-13

    8. [8]

      Every year from 2006 to 2024, roughly half of US renter households (46.3% to 50.7%) were cost burdened. confirmedas of 2026-05-13

    9. [9]

      NLIHC's "Housing Wage" is the hourly wage a full-time worker must earn to afford a modest rental at HUD's Fair Market Rent while spending no more than 30% of income on housing. confirmedas of 2026-07-23

    10. [10]

      The National Low Income Housing Coalition's Out of Reach 2026 report estimates that a full-time worker needs $34.73 an hour to afford a modest two-bedroom rental at HUD's Fair Market Rent, and $29.19 for a one-bedroom, without spending more than 30% of income. confirmedas of 2026-07-23

    11. [11]

      US house prices and rents rose steadily for about a decade before 2020, rose more sharply during the pandemic, and have since moderated or in some places reversed while staying well above pre-pandemic levels. confirmedas of 2026-09-25

    12. [12]

      The median existing-home price was $414,300 in 2025, down 1% from 2024 after inflation but 21% above 2019 in inflation-adjusted terms. confirmedas of 2026-09-25

    13. [13]

      The median asking rent was $1,492 in 2025, down 2% from 2024 after inflation but nearly 18% above 2019 in inflation-adjusted terms; asking rents cover new leases, not rents paid by current tenants. confirmedas of 2026-09-25

    14. [14]

      Freddie Mac's average 30-year fixed mortgage rate was 7.40% in the week of October 8, 2026, up from 7.28% a week earlier and 6.30% a year earlier; the survey is published weekly on Thursdays. confirmedas of 2026-10-08

    15. [15]

      CRS reports that many researchers see an aggregate US housing shortage of varying size, while others argue shortages are concentrated in specific markets or in housing for low-income renters. confirmedas of 2026-09-25

    16. [16]

      Harvard's Joint Center for Housing Studies, in The State of the Nation's Housing 2026, found nearly half of renter households cost burdened in 2024, slowing construction, record-low residential mobility, and a shrinking supply of low-rent housing that market forces alone are unlikely to replace. confirmedas of 2026-06-17

    17. [17]

      Nearly all federal housing assistance funding comes from annual appropriations; more than half of HUD's appropriations go to maintaining assistance for about 4.5 million households in the Housing Choice Voucher and Project-Based Rental Assistance programs, which together serve an estimated one in four eligible families. confirmedas of 2026-09-25

    18. [18]

      CRS notes that many housing researchers identify local zoning and land use policies as one of several contributing factors to undersupply in some areas; federal influence has come mainly through guidance, technical assistance and research. confirmedas of 2026-09-17

    19. [19]

      Among other things the law lets CDBG funds be used for new housing construction (up to a limit), reauthorizes the HOME program, authorizes CDBG-Disaster Recovery for three years, removes the permanent-chassis requirement for manufactured homes, and creates grants to reward communities that reduce regulatory barriers. confirmedas of 2026-09-25

    20. [20]

      Executive Order 14394 (March 2026) directed agencies to reduce regulatory barriers to new home construction, particularly single-family homes; in May 2026 HUD published best practices on construction costs, land availability and build times. confirmedas of 2026-09-25

    21. [21]

      On June 25, 2026, New York City's Rent Guidelines Board voted 7-1 to set 0% increases on one- and two-year rent-stabilized leases starting October 1, 2026 through September 30, 2027, covering roughly 1 million apartments. confirmedas of 2026-06-26

    22. [22]

      A 2019 American Economic Review study of San Francisco's 1994 rent control expansion found it cut tenants' mobility by 20% and reduced displacement, but landlords reduced rental supply by 15%, which the authors say likely raised market rents in the long run. confirmedas of 2026-10-11

    23. [23]

      The law combines the Senate's ROAD to Housing Act of 2025 (S. 2651) and the House's Housing for the 21st Century Act (H.R. 6644), and contains 12 titles and 59 sections. confirmedas of 2026-09-17

    24. [24]

      Section 1001 bars companies owning at least 350 single-family homes from acquiring more, with exceptions such as homes newly built to rent; the ban, which the administration had asked Congress to enact, takes effect January 7, 2027. confirmedas of 2026-09-25

    25. [25]

      The law authorizes new grant programs but does not fund them; implementation depends on future appropriations and rulemaking. confirmedas of 2026-09-25

    26. [26]

      The UK government's target is 1.5 million net additional homes in England during the current Parliament, measured by net additional dwellings. confirmedas of 2026-10-11

    27. [27]

      England added 208,600 net additional dwellings in 2024-25, 6% fewer than in 2023-24. confirmedas of 2026-10-11

    28. [28]

      An estimated 437,900 net additional homes were delivered in England between 9 July 2024 and 20 September 2026, about 29% of the 1.5 million target; Full Fact rates the pledge as "appears off track". confirmedas of 2026-10-11

    29. [29]

      The UK government expects to publish 2025-26 net additional dwellings statistics in November 2026. confirmedas of 2026-10-11

    Revision history (1)
    1. Page created.

    Created Oct 11, 2026. Last reviewed by an editor on Oct 11, 2026. Next scheduled review: Nov 20, 2026.

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    "Affordable housing explained: costs, supply and policy in 2026." ContentLora, updated Oct 11, 2026. https://contentlora.com/explain/affordable-housing-explained

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