Rebuilding Confidence in America’s Housing Finance System

The stability of the U.S. housing market hinges upon a well-functioning and transparent housing finance system. As the construction sector continues to weather macroeconomic pressures—rising interest rates, inflation-driven material costs, and labor shortages—financial infrastructure reform is emerging as a central concern. Builders depend on predictable access to mortgage capital for both single-family and multifamily projects, and disruptions in the secondary mortgage market can quickly translate into diminished housing starts and stunted development pipelines.

The National Association of Home Builders (NAHB) has recently renewed its call for Congress and the Executive Branch to reaffirm housing as a national priority. This advocacy echoes the foundational vision of the Housing Act of 1949, which established “a decent home and a suitable living environment for every American family” as a federal mandate. Despite market evolution over the decades, the core tenet remains the same: housing must be seen as infrastructure, not merely a private investment.

At the heart of the current policy conversation are Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that have been under conservatorship since the 2008 financial crisis. The NAHB’s position is clear—Congress and federal regulators must develop a stable path forward that ends conservatorship without destabilizing the mortgage securities market. This includes maintaining government-backed guarantees of mortgage-backed securities (MBS), promoting transparency for investors, and ensuring the availability of affordable, long-term mortgage products.

The Housing Finance Committee’s 2025 resolution emphasizes both the federal role in market stabilization and the diversification of capital sources. A future-ready system must integrate federal, state, regional, and private capital while strengthening oversight to prevent past regulatory failures from reemerging. Importantly, reforms should maintain—not erode—the availability of essential products like 30-year fixed-rate mortgages, which are the backbone of American homeownership.

Modernizing Mortgage Access While Protecting Market Liquidity

A sophisticated housing finance system must strike a delicate balance: encouraging innovation and capital flow without introducing volatility or exacerbating systemic risks. Construction firms and real estate developers increasingly find themselves navigating a fragmented financing environment. While institutional capital has grown more active in residential development, the mortgage market still relies heavily on predictable secondary market activity and federal agency support.

The NAHB’s proposed framework advocates for a multi-pronged approach to reform:

• The Enterprises (Fannie Mae and Freddie Mac) should operate with adequate capital reserves, capable of ensuring timely MBS payments without overreliance on emergency interventions.
• Oversight by the Federal Housing Finance Agency (FHFA) should be preserved but restructured under a board model to avoid unilateral regulatory shifts and improve accountability.
• Mortgage offerings should include risk-transparent products such as standardized adjustable-rate mortgages and reasonable multifamily lending structures.
• Government housing entities—HUD, FHA, VA, USDA, and Ginnie Mae—must continue to function efficiently and offer support to builders and buyers alike.
• State and local Housing Finance Agencies (HFAs) should be empowered to play a greater role in affordable housing funding, particularly in underserved and rural areas.

By maintaining this diversified architecture, the mortgage market can continue to serve a wide spectrum of borrowers while insulating itself from single-point regulatory or liquidity shocks. Of particular importance is the countercyclical function of the GSEs, which have historically stepped in to stabilize the market during downturns by sustaining mortgage credit access. Preserving this function is crucial to avoiding a repeat of the sharp credit contractions that followed the 2008 crisis.

Additionally, any reforms must be implemented with sensitivity to timing and long-term market implications. Rapid policy shifts—especially without full stakeholder consultation—risk undermining investor confidence and raising borrowing costs. Transparency, balance, and feedback loops involving builders, lenders, and investors will be essential for any sustainable transition.

Strategic Priorities for Builders Navigating Finance Reform

Construction business owners must take a proactive role in preparing for potential changes in housing finance. As legislative and regulatory discussions unfold, strategic positioning can help companies mitigate risks and seize emerging opportunities in both single-family and multifamily markets.

Key action points include:

• Monitor Legislative Developments: Stay informed on NAHB updates, FHFA regulatory announcements, and Congressional proposals related to housing finance reform. Understanding the policy landscape enables informed investment decisions.
• Diversify Capital Relationships: Builders should establish connections with both national lenders and state/local housing finance agencies to buffer against federal policy shifts.
• Standardize Loan Documentation: Streamlining credit documentation for new builds can reduce delays and improve lender confidence, especially as new underwriting guidelines are introduced.
• Explore Public-Private Partnerships (PPPs): Builders in affordable or workforce housing markets should consider collaborations with local governments and HFAs to access subsidized financing.
• Model for Higher Capital Costs: If reforms reduce the implicit government guarantee behind GSE MBS, mortgage rates may rise slightly. Builders should run financial models to assess impact on buyer eligibility and project profitability.

While broad reform remains in development, a significant window exists for construction firms to future-proof operations. Ensuring internal systems, financial forecasting models, and stakeholder communications are aligned with a changing mortgage landscape is a defensible strategy in uncertain times.

As the NAHB continues to advocate for a stable, inclusive, and transparent system, construction leaders must recognize that participation in policy shaping—through feedback, engagement, and coalition-building—is no longer optional. The stakes are too high, particularly for businesses operating at the intersection of development finance and residential market demand.