Life, Liberty and a Mortgage: The 5 Federal Laws That Turned Homeownership Into an American Reality

A new Realtor.com^® report traces how Congress has intervened — again and again — to make the American dream financially possible, and what it would take to do it once more

AUSTIN, Texas, June 30, 2026 /PRNewswire/ -- As the United States marks 250 years of independence, just over 65% of American households own their homes, a rate that did not arrive by accident. A new Realtor.com^® analysis of federal housing legislation finds that significant surges in U.S. homeownership have each been preceded by an act of Congress, from the Homestead Act of 1862 to the Housing and Economic Recovery Act of 2008, and that the tools to move the needle again exist today.

"Homeownership has never been purely a product of markets, from 44% in 1940 to 62% by 1960, federal legislation has been a driving force in American homeownership history and a 4-million-home supply gap is waiting for its moment," said Joel Berner, senior economist at Realtor.com^®. "At several major inflection points in this country's history, from the Great Depression, World War II, the Civil Rights era to the financial crisis, Congress stepped in and changed who could own a home and how they could afford one. The history is remarkably consistent: legislation works."

The report, released in conjunction with the nation's 250th anniversary, traces five landmark bills and their measurable effects on the homeownership rate, which the Census Bureau has tracked since 1890.

From Free Land to FHA: A Legislative History of Homeownership

The Homestead Act of 1862, passed while the Civil War raged, granted 160-acre plots to any adult who could pay a small filing fee and commit five years of labor to the land. More than 270 million acres across 30 states were claimed between 1862 and 1976. The act functioned as the country's first homeownership subsidy, access through effort rather than existing wealth, and set a baseline for American property ownership that every subsequent Congress would build on.

The Great Depression all but collapsed that foundation. Mortgage defaults swept the country in the early 1930s, lenders stopped issuing new loans and the housing market ground to a halt. Congress responded with the National Housing Act of 1934, which created the Federal Housing Administration and restructured the conventional mortgage, shrinking required down payments, extending repayment periods and insuring loans to give lenders confidence. The mortgage market as Americans know it today was born in that legislation, though the FHA's underwriting policies also institutionalized redlining, a legacy of discrimination that would take another generation of legislation to begin to undo.

That correction came in part from the GI Bill. The Servicemen's Readjustment Act of 1944 guaranteed veterans low-interest, no-money-down home loans backed by the federal government. The Veterans Administration guaranteed more than 2 million home loans by 1950. The numbers tell the story directly: in 1940, 43.6% of U.S. households owned their homes. By 1960, that figure was 61.9%.

"The postwar homeownership surge is the most dramatic in American history, and it was not organic," Berner said. "It was the direct result of Congress making homeownership financially accessible to a generation of Americans who would not otherwise have been able to achieve it. That's the playbook."

The Civil Rights Act of 1968, better known as the Fair Housing Act, took aim at the redlining that the FHA had helped entrench. By prohibiting discrimination in the sale, rental and financing of housing based on race, color, national origin, religion, sex, familial status and disability, it expanded access to credit for home purchases across minority communities. Homeownership continued to climb from the bill's passage through approximately 1980, now with broader inclusion.

The most recent legislation examined, the Housing and Economic Recovery Act of 2008, was not designed to grow homeownership but to prevent its collapse. With Fannie Mae and Freddie Mac on the brink, HERA placed both institutions under federal conservatorship, expanded FHA loan limits, established a 3.5% minimum down payment and created a tax credit for first-time buyers. The homeownership rate had peaked at 69.0% in 2004 and bottomed at 63.4% in 2016 a decline that, without HERA's stabilizing interventions, could have been more severe.

The Challenge Today — and What Can Be Done

The housing market is not facing a financial system in freefall or the aftermath of a world war. Instead, it is straining against an inadequate supply of homes. According to our analysis, the U.S. housing supply gap widened to an estimated 4.03 million homes in 2025, up from 3.8 million in 2024. New construction once again fell short of household formation and pent-up demand from younger households persists.

The stakes are substantial. Households that purchase their first home by age 30 accumulate an average of $119,000 more in net worth — 22.5% higher — by age 50 compared to those who wait until their 40s. The median age of a first-time homebuyer was 30 in 1990; by 2025, it had climbed to 40. Home prices have risen nearly twice as fast as incomes over that span, and the typical time needed to save for a down payment has grown from approximately three years to nearly 10.

Children raised in homeowner households are 18.4 percentage points more likely to become homeowners themselves by age 35. Homeowners are 1.3 times more likely than renters to expect to leave assets to the next generation.

The biggest obstacle to closing the supply gap is regulation. Local zoning and permitting rules have made homebuilding slow and expensive — the National Association of Home Builders estimates that regulation adds more than $130,000 to the cost of a newly built home. The U.S. Conference of Mayors has passed a bipartisan policy statement affirming the urgent need for national action on housing supply.

The federal government does not control local zoning. But it can influence it — conditioning federal grant funding on the adoption of standardized, permissive zoning laws and streamlined permitting processes is a mechanism that mirrors the indirect policy levers that have worked before in American cities. The 21st Century ROAD to Housing Act has a provision to do this along with many other policies aimed at boosting housing supply in the U.S. With broad support in both houses of Congress, this bill could become the next example of legislation that enables Americans to achieve their dreams of owning a home.

The pattern established across 250 years of American history is clear: when access to homeownership narrows, federal legislation has the capacity to reopen it.

About Realtor.com^®
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Media Contact: Mallory Micetich, [email protected]

SOURCE Realtor.com