A federal law designed to boost American manufacturing is creating unexpected roadblocks for affordable housing construction across the nation.
The Build America, Buy America Act requires federally-funded housing projects to use American-made components for nearly every element, from heating systems and light fixtures to small items like sink hooks and ceiling fans. However, housing developers report that many of these products have been manufactured overseas for years due to lower labor costs.
While builders can request exemptions, the approval process through the Department of Housing and Urban Development has become severely backlogged. HUD, which saw significant staff reductions under the previous Trump administration, has only approved a small number of projects.
This bureaucratic slowdown has resulted in construction delays and added hundreds of thousands of dollars in costs during what experts call a nationwide affordable housing emergency.
“They need to be treating this like the fire that it is,” stated Tyler Norod, president of Westbrook Development Corporation, which constructs affordable housing in Maine.
“We’ve sort of resigned ourselves that we’re just gonna build less units across the entire country during a housing crisis,” Norod added.
The impact reaches real people waiting for affordable homes. Diana Lene, a 76-year-old from Fargo, North Dakota, has spent five years on housing waitlists. Living on Social Security, her current apartment consumes most of her budget.
“It’s just maxing my budget down to pennies,” she explained. To manage expenses, she limits her driving and shops only for discounted food.
“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.”
Lene hopes to move into an apartment being developed by Beyond Shelter, a nonprofit organization. However, CEO Dan Madler had to delay lumber purchases for his 36-unit project to ensure compliance with federal requirements. He also cannot locate American-manufactured ceiling fans and remains uncertain when HUD will grant necessary waivers.
President Joe Biden enacted the Build America, Buy America Act in 2021 as part of the Infrastructure Investment and Jobs Act. The legislation expanded existing efforts to strengthen domestic manufacturing as the country recovered from pandemic-related economic challenges. The law, known as BABA, covers all infrastructure projects receiving federal agency funding, extending beyond just housing developments.
Denver-based developer Julie Hoebel reports spending more than $60,000 solely on consulting services to research suppliers and verify American-made materials, not including additional labor expenses.
However, her waiver requests submitted to HUD in November for approximately 125 materials needed for an 85-unit project remain unapproved.
“If they take much longer then we’ll come to a standstill,” she warned.
HUD currently requires at least six months to process many waiver applications.
Even supporters of the legislation acknowledge that HUD must accelerate waiver approvals and provide clearer guidance to the industry, similar to what other federal agencies have implemented.
HUD declined to respond to Associated Press inquiries about waiver delays that developers claim increase costs and concerns about process transparency. The agency issued a statement saying it remains committed to “ensuring that federal spending supports America’s industrial base” while “closely monitoring how compliance with these policies impact costs for builders.”
When asked in January whether delays and increased costs warrant exempting affordable housing from BABA requirements, HUD Secretary Scott Turner indicated the agency was examining the matter without providing specifics. “We are looking at this … with BABA as it pertains to HUD to provide flexibility to certain projects in certain places around our country,” Turner stated, adding that HUD is committed to ensuring developers receive “the flexibility they need as it pertains to building.”
Advocates maintain the legislation itself isn’t problematic.
Labor unions representing steel and manufacturing workers argue that taxpayer money should support American-made products and suppliers will adapt to meet demand for currently unavailable items.
“You’ve got a system in place that leans heavily on using imported materials to make a better profit,” said Scott Paul, president of the Alliance for American Manufacturing. “I don’t know if that serves the public good.”
Jennifer Schwartz, director of tax and housing advocacy at the National Council of State Housing Agencies, noted that no national data exists on BABA’s cost impact. She described the waiver process as “failing” because requirements were implemented before evaluating domestic manufacturing capabilities.
According to Kaitlyn Snyder, managing director of the National Housing and Rehabilitation Association, an affordable housing industry organization, suppliers will find it less difficult to increase raw material production domestically. However, manufactured products like appliances and elevators will require more time to become available.
“I don’t know that it economically, financially makes sense for people to be producing door hinges,” Snyder observed. “We are an advanced country and we’ve outsourced a lot of that stuff.”
The housing legislation passed by the Senate in March did not mandate that HUD address BABA implementation issues.
“The process isn’t working for affordable housing,” said Jessie Handforth Kome, who worked at HUD for nearly four decades until 2024. “People want to comply, but it’s unclear how to.”
Vermont developer Jessica Neubelt estimates spending an extra $150,000 just to confirm that iron and steel used in one project met American-made requirements. She expressed equal frustration over the hundreds of hours required, time that could be devoted to additional projects.
“I would like every member of Congress to sit in on a construction meeting,” Neubelt said. “The amount of detail that goes into figuring out if a specific thing is compliant or not is enormous.”
Representative Mike Flood, a Nebraska Republican, has pushed to exempt certain HUD funding from BABA requirements.
“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 told the Associated Press.
Roy Houseman, legislative director at United Steelworkers, dismissed concerns about cost increases as exaggerated.
“A lot of developers seem to have tried to throw things in and make statutory changes to policies that have been in place for basically five years now instead of making a good-faith effort to really push HUD,” Houseman said.
Union representatives point out that the law provides some flexibility.
Developers can receive exemptions for American-made products if they raise a project’s total cost by more than 25%. Additionally, a small percentage of a project’s material costs is exempt. However, most developers argue this percentage is insufficient to cover all items not manufactured domestically.
Some developers are exploring alternatives to avoid federal funding entirely. This approach presents challenges since federal dollars, while often representing a small portion of affordable housing project funding, can determine whether sufficient money exists to complete construction.
Kentucky developer Scott McReynolds plans to construct two four-unit projects small enough to avoid BABA requirements instead of applying for federal grants to build 20 to 30 affordable homes.
Finding American-made materials proves particularly difficult in the rural areas McReynolds serves.
“It’s a nightmare,” he concluded.
