HUD urges states to cut fees, simplify codes and fast-track permits

On Wednesday, the U.S. Department of Housing and Urban Development (HUD) released a detailed deregulation roadmap aimed at state and local governments that, it argues, could lower per-unit costs and shorten cycle times for homebuilders.

HUD’s new “State and Local Best Practices for Home Construction” report offers a set of recommended policy changes that target permitting fees, building codes, land-use limits and inspection timelines that add costs and risks to new-home projects.

The report would implement President Trump’s March 13, 2026, executive order, which gave HUD 60 days to outline recommended permitting and zoning practices. 

The recommendations come amid a wave of local regulatory reforms, from increasing transit-oriented development to expanding mixed-density zoning, legalizing single-room occupancy and reducing minimum lot size requirements, among many othes.

Removing Regulatory Barriers to Affordable Home Construction 

HUD Secretary Scott Turner, in a statement, framed the report as a clear starting point for states and municipalities to “take inventory of their regulations and policies and make changes that will lower the cost to build and enable more efficient housing supply growth.” 

For builders, the document functions as a potential list of changes that trade groups and executives can carry into conversations with governors, legislators, mayors and planning departments.

HUD cited data that regulatory costs now contribute more than $100,000 to the final price of a new single-family home, and that certain state and local green energy mandates can add up to $30,000 to construction costs. It projects that deregulation measures taken in 2025 will ultimately save Americans a combined $212 billion.

Since Trump took office last year, HUD said it has:

• Rescinded the 2021 International Energy Conservation Code  
• Ended the Obama-Biden-era Affirmatively Furthering Fair Housing rule
• Rolled back rules within the Federal Housing Administration’s single-family mortgage insurance program it characterized as onerous
• Supported homeownership and affordability for more than 1 million Americans, including over 500,000 first-time buyers

Three levers for builders: cost, land and time

The HUD guidance grouped recommended actions into three categories that map directly to developers and homebuilders:

• reduce fees, mandates and code-driven construction expenses
• open more sites to residential development
• compress permitting and inspection timelines

Across all three categories, HUD encourages jurisdictions to use technology — including e-signatures, online portals and artificial intelligence — to replace manual, paper-based processes that slow projects. In that vein, many municipalities, such as Seattle, Honolulu and Denver, are already experimenting with AI platforms that streamline permitting and plan reviews.

Cost: fee caps, code limits and more flexibility on construction methods

On the cost side, HUD’s recommendations line up with long-standing builder concerns. The report recommends that states and municipalities simplify and reduce fees that make new home construction more costly. The report recommends that local and state governments do the following:

• Cap permitting fees and eliminate impact fees that cannot be directly tied to the specific project
• Cut miscellaneous charges by curtailing other fees, mandates and taxes on new development and construction
• End unrelated offsite requirements</strong> by prohibiting mandates to build offsite infrastructure not directly connected to the project
• Increase fee transparency by requiring jurisdictions to publish a list of all development fees.
• Stop retroactive codes by barring the application of new or amended building codes to projects already in the pipeline.
• Limit local code add-ons by restricting state and local additions to building, environmental and labor codes, as well as ICC and federal standards, except for resilience or where they reduce costs.

The report also urges local governments to roll back cost-adding mandates by eliminating or sunsetting green energy requirements and other similar code provisions. It also urges the repeal of mandatory electrification of appliances and heaters. 

Additionally, HUD recommends that municipalities open the door to factory-built housing by regulating manufactured and modular homes based on objective safety standards instead of the construction method. This includes reexamining bans or tight restrictions where comparable site-built homes are allowed, and easing aesthetic mandates. 

Many of these regulations, the report argues, directly affect hard costs (materials and systems required to meet local codes) and soft costs (fees, engineering and redesigns triggered by late code changes). Builders operating in states that adopt these practices could see more predictable cost structures and fewer project-specific code fights, HUD says. 

Land: more lots, fewer growth caps and clearer rules

Land access is another focus of the report. HUD recommends that jurisdictions:

• Speed up the disposition of public land for housing, including middle-income housing
• Remove growth controls outside urban cores, such as urban growth boundaries, moratoriums and commuting penalties that limit where new subdivisions can go.
• Dial back tree protection rules that impose minimum tree standards and high removal fees on single-family lots.
• Allow by-right single-family development, and reduce discretionary approvals for typical detached product.
• Use in-lieu fee structures for wetlands mitigation instead of project-by-project barriers
• Publish all required inspections, permits and approvals so builders can clearly see each step in the process.

The HUD report argues that these changes would reduce entitlement risk, particularly on fringe and infill projects that are now constrained by growth caps or discretionary approvals. By-right standards and clearer rulebooks could translate into more predictable lot pipelines and better control over absorption planning, the report argues. 

Time: shot clocks, fast lanes and third-party inspectors

The timeline section focuses on shortening the path from land control to vertical construction. HUD’s recommendations include:

• Streamlined permit processes, including a dedicated “fast lane” for residential and new-building permits and the elimination of unnecessary duplicate reviews.
• Binding timelines for government decisions, including a “shot clock” of less than 60 days for right-to-build approvals and less than 30 days for construction permitting and inspections.
• Unified development ordinances</strong> to consolidate disparate land-use rules.
• Revisiting planning and zoning procedures</strong>, including meeting schedules, publication rules and in-person appearance mandates that can drag out hearings.
• Technology-enabled approvals, including the use of artificial intelligence to expedite permit review and flag issues.
• Third-party inspections and studies, allowing builders to choose from state-certified inspectors for code inspections and state-certified engineers for environmental, site plan and plat reviews.
• Faster dispute resolution, with both government agencies and private parties on construction issues.
• License reciprocity across and within states for building contractors. 

The HUD report argues that these recommendations would lead to shorter and more predictable permitting and inspection windows. It could also translate into faster inventory turns, lower interest carry, less weather risk and more accuracy in start and delivery schedules for buyers and lenders, the report claims. 

Why this matters for homebuilders

Most of the national housing policy discussion is focused on the bipartisan 21st Century ROAD to Housing Act, which passed the House on Wednesday. However, homebuilders know that most of the important reforms happen at the state and local levels. 

HUD’s best practices report isn’t a mandate that is binding for any state or municipality. There are also provisions in there that may evoke controversy or disagreement. 

However, the report does give the industry a federally endorsed checklist to push for locally, and reinforces the Trump administration’s larger push to “restore housing affordability”.

The report signals where federal housing leadership wants state and local policy to move: lower fees, fewer add-on codes, more by-right development and faster approvals. How quickly or broadly that vision translates into on-the-ground change will depend on decisions in state capitols, county commissions and city councils over the next several years.

Tyler Williams reported and wrote this article with drafting assistance from HousingWire Automation, an editorial tool that helps transform announcements and industry data into HousingWire-style news coverage.