The Treasury Department on Thursday moved to implement provisions of a bipartisan housing law, including restrictions on institutional investors purchasing single-family homes. The forthcoming regulations would prohibit large institutional investors from buying single-family homes beginning January 7, 2027, subject to exceptions. Treasury is formalizing the prohibition under the 21st Century Road to Housing Act.
The law classifies an entity as a large institutional investor if the entity directly or indirectly controls investments in at least 350 homes. The law exempts several categories of purchases, including purchases through build-to-rent programs, renovate-to-rent programs and programs intended to increase homeownership.
Both chambers of Congress approved the legislation by overwhelming majorities in July. Senator Elizabeth Warren, a Massachusetts Democrat, and Representative French Hill, an Arkansas Republican, championed the legislation. The legislation aims to streamline federal reviews of housing construction and increase the nation's housing supply. President Trump withheld a signature while protesting Senate Republicans' failure to pass voter identification legislation, a leading Trump priority. The housing law became effective in July without Trump's signature. Earlier this year, Trump signed an executive order directing the administration to restrict institutional investors' purchases of single-family homes.
Treasury Secretary Scott Bessent said in a Thursday release that the administration continues to make affordable homeownership more accessible to millions of young and working families. Bessent said Treasury is working to give families and workers a fair opportunity to buy homes locally by expanding supply and restricting large institutional investors' market role. Bessent said Treasury also seeks to maintain housing-market stability and avoid needless disruption. Treasury unveiled the regulations less than two weeks before the midterm elections. Republicans are fighting to retain control of Congress amid growing public frustration with the economy.
However, housing experts say Wall Street investors own too few homes to substantially affect housing prices. Sean Fergus, Zonda's vice president of economic research, said in January that institutional investors own approximately 500,000 to 800,000 homes, depending on the classification threshold. Fergus said even the upper estimate represents only 0.5% of all housing units. Fergus said the upper estimate also represents less than 1.0% of the country's roughly 100 million single-family homes.
Home sales have slowed amid elevated mortgage rates. The National Association of Realtors said pending home sales fell 7.3% from August to September. Freddie Mac reported Thursday that this week's average rate for a 30-year fixed mortgage was 7.32%. Trump also signed an executive order on Thursday intended to reduce payments on government-backed mortgages.
Treasury to Restrict Institutional Investors from Buying Single-Family Homes from 2027
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Summary
The U.S. Treasury Department announced measures tied to the 21st Century Road to Housing Act, which will bar large institutional investors from purchasing single-family homes starting January 7, 2027. Under CFT guidelines, entities managing 350 or more homes fall under the restriction, except those operating build-to-rent or renovate-to-rent programs. Treasury Secretary Scott Bessent said the rule aims to boost homeownership for working families and support housing stability. The timing aligns with efforts to influence liquidity and crypto markets, as the move precedes key midterm elections.
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