A federal policy designed to strengthen domestic manufacturing is increasingly being blamed for slowing affordable housing construction across the United States, as developers struggle to meet strict sourcing requirements.
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The “Build America, Buy America” (BABA) law mandates that materials used in federally funded projects—from HVAC systems to lighting fixtures—must be made in the U.S. While the rule aims to boost American industry, developers say it is creating supply bottlenecks and driving up costs at a time when the country faces a severe housing shortage.
Many commonly used construction components are still largely manufactured overseas, leaving builders scrambling to find compliant alternatives or apply for federal waivers.
Although waivers are available, developers say the approval process has slowed significantly. The U.S. Department of Housing and Urban Development (HUD), which oversees many of these projects, has approved only a limited number of requests, contributing to construction delays and budget overruns.
“They need to be treating this like the fire that it is,” said Tyler Norod, president of Westbrook Development Corporation.
“We’ve sort of resigned ourselves that we’re just gonna build less units across the entire country during a housing crisis.”
The delays are compounding affordability challenges for renters already struggling with rising housing costs.
Diana Lene, a 76-year-old retiree in North Dakota, has spent five years on affordable housing waitlists while coping with increasing rent burdens.
“It’s just maxing my budget down to pennies,” she said.
“I’m just trying to keep a roof over my head, but it’s getting more and more difficult,” Lene said. “I don’t like to live in fear, and yet sometimes it jumps in there.”
Developers describe the waiver process as cumbersome and unpredictable, with approvals often taking six months or longer. In some cases, projects are being paused while builders verify compliance for even minor components.
Dan Madler, CEO of nonprofit developer Beyond Shelter, said his team has delayed ordering materials while trying to confirm compliance and secure approvals.
In Denver, developer Julie Hoebel reported spending more than $60,000 on consultants to identify qualifying materials for a single project, with waiver requests still pending months later.
“If they take much longer then we’ll come to a standstill,” she said.
HUD acknowledged the challenges but emphasized its dual priorities.
The agency said it is committed to “ensuring that federal spending supports America’s industrial base” while “closely monitoring how compliance with these policies impact costs for builders.”
HUD Secretary Scott Turner indicated earlier this year that officials are reviewing whether additional flexibility may be needed, stating: “We are looking at this ... with BABA as it pertains to HUD to provide flexibility to certain projects in certain places around our country,” and reaffirming that the agency wants developers to have “the flexibility they need as it pertains to building.”
While developers argue the law is slowing urgently needed housing production, labor unions and manufacturing advocates maintain that the policy is necessary to strengthen domestic supply chains.
Scott Paul, president of the Alliance for American Manufacturing, said reliance on imported materials has long shaped construction economics.
“You’ve got a system in place that leans heavily on using imported materials to make a better profit,” he said. “I don’t know if that serves the public good.”
Still, housing advocates say the implementation timeline has not aligned with current manufacturing capacity.
Jennifer Schwartz of the National Council of State Housing Agencies said the waiver system is struggling to keep up with demand, noting that requirements were introduced before domestic supply chains could fully respond.
Kaitlyn Snyder of the National Housing and Rehabilitation Association added that while raw materials may scale more quickly, manufactured products like appliances and elevators will take longer to produce domestically.
“I don’t know that it economically, financially makes sense for people to be producing door hinges,” Snyder said. “We are an advanced country and we’ve outsourced a lot of that stuff.”
Some developers are now reconsidering how they structure projects to avoid triggering federal requirements altogether.
Kentucky-based builder Scott McReynolds said he is scaling down plans for a larger development into smaller projects that fall outside BABA thresholds.
“It’s a nightmare,” he said.
Others warn that without reforms, fewer affordable housing units will be built nationwide—further straining supply and worsening affordability.
Jessie Handforth Kome, a former HUD official, said the issue lies in execution rather than intent.
“The process isn’t working for affordable housing,” she said. “People want to comply, but it’s unclear how to.”
Meanwhile, lawmakers are beginning to weigh potential changes. U.S. Rep. Mike Flood has called for limited exemptions to reduce costs and speed up development.
“Owning a home is the American dream, but it’s out of reach in a very big way and anything that adds cost to that isn’t allowing hardworking Americans to achieve the dream,” Flood said.
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The challenges surrounding BABA highlight a broader tension between industrial policy and housing affordability. While the law aims to rebuild domestic manufacturing and reduce reliance on global supply chains, the transition period is proving difficult for industries that depend heavily on imported components.
Affordable housing projects are particularly sensitive to cost increases because they rely on layered financing structures, including tax credits, grants, and subsidies. Even small delays or price increases can jeopardize entire developments.
In the long term, the policy could encourage growth in U.S.-based manufacturing for construction materials. However, developers warn that without faster waiver approvals or temporary flexibility, the near-term impact could be fewer housing starts—especially at a time when demand is at historic highs.
Originally reported by The Associated Press in Oregon Live.
