The ROAD Act passed by the Senate aims to expand America’s housing supply. It’s likely to shrink it instead

The United States Senate has officially passed the Residential Opportunity and Affordability (ROAD) Act, a landmark piece of legislation aimed at restructuring the single-family rental market. The bill specifically targets institutional investors—defined as entities owning more than a set threshold of residential properties—by implementing tax penalties and acquisition limits. While the bill's sponsors claim it will return 'the American dream' to families by reducing competition from hedge funds, industry experts interviewed by Fortune suggest the move is counterproductive. They argue that institutional capital has become a primary driver for new 'build-to-rent' communities, which have provided a significant portion of new housing starts over the last three years. By disincentivizing this investment, the ROAD Act may lead to a sharp decline in housing starts, further tightening an already historically low supply of homes and potentially forcing rents and purchase prices even higher in the long term.