After the 2026 Midterms: What a Divided Congress Means for Housing

Democrats won control of both the U.S. House and the Senate in the Nov. 3, 2026 midterm elections. As of Nov. 9, they had won at least 255 of the 435 House seats and at least 54 Senate seats, with a few races still uncalled, according to CNBC and NBC News. When the new Congress is seated in January, a Democratic Congress will share Washington with a Republican White House for the next two years.

Divided government usually means fewer big laws. Housing may be the exception, because the largest federal housing bill in years passed this summer with votes from both parties. For buyers, owners and sellers, the practical questions are narrower than the headlines: what is already law and will not change, what has to happen before the end of the year, and which proposals have a real path in a split Congress.

What the Election Does Not Change

The 21st Century ROAD to Housing Act became law on July 11, 2026, after passing the Senate 85 to 5 and the House 358 to 32. An election cannot undo it, and most of its deadlines fall in the months ahead. The best-known piece, the limit on large institutional investors buying single-family homes, takes effect on Jan. 7, 2027. Other sections give HUD, the Federal Housing Finance Agency and the Treasury months or years to write rules on manufactured housing, appraisals and loan disclosures. The full schedule is laid out in the breakdown of what the ROAD to Housing Act changes for buyers and homeowners.

The margins on that bill are the reason housing looks different from other issues. A measure that clears the Senate with 85 votes does not depend on which party holds the gavel.

The election also does not set mortgage rates. Lenders price loans off the bond market, which responds to inflation, the Federal Reserve and investor demand for Treasury debt. Freddie Mac's weekly survey put the average 30-year fixed rate at 7.18% on Nov. 5, 2026, down from 7.24% a week earlier and the third straight weekly decline. A year earlier it averaged 6.22%. The Fed's last decision of the year comes in December, and the reasoning behind its October hold is covered in the report on the Fed keeping rates at 3.75% to 4%.

The Deadline That Comes First: Dec. 11

The outgoing Congress still has work to finish. The stopgap spending law signed in early September funds the government only through Dec. 11, 2026. Lawmakers need to pass another short-term extension or full-year spending bills by then, and either route needs votes from both parties in the Senate.

One item tied to that date matters directly to home sales. The National Flood Insurance Program's authorization expires along with the spending law, according to a year-end review by the law firm Holland & Knight. Existing flood policies stay in force if the program lapses, and claims are still paid. What stops is the program's ability to issue new policies and renew old ones. Because lenders require flood insurance on mortgaged homes in high-risk flood zones, a lapse can hold up closings on those properties until Congress acts.

Congress has extended the flood program on short notice many times, usually inside the same bill that keeps the government open. Still, a buyer scheduled to close on a home in a mapped flood zone in mid-December has a reason to watch the calendar:

• Ask the lender and insurance agent now whether the property needs flood coverage.
• Apply for the policy early. A policy bound before a lapse stays valid.
• Ask whether the seller's existing NFIP policy can be assigned to the buyer at closing.
• Get a quote from a private flood insurer as a backup. Many lenders accept private policies.

Where the Two Parties Already Overlap

The clearest preview of housing bills that could move in a divided Congress came a month before the election. On Oct. 5, 2026, the bipartisan House Build America Caucus, led by Rep. Josh Harder, a California Democrat, and Rep. Celeste Maloy, a Utah Republican, released what it calls the Build More Agenda: more than 60 proposals across seven policy areas, housing among them. It is an agenda, not a bill, and nothing in it has been voted on. Three of its housing ideas would reach ordinary buyers and owners if they became law.

Right to Build Zones

Cities would volunteer to designate areas where housing is approved automatically if it meets a standard set of zoning and permitting rules. In return, the federal government would pay the city a fixed amount for each home completed above its recent building pace. The agenda uses $10,000 per home as an example, roughly what local governments charge in impact fees on new multifamily housing. Cities would still choose where the zones go.

A second mortgage for backyard units

Accessory dwelling units, the small second homes built on an existing lot, are hard to finance. Most are built by owners who can pay cash. The agenda proposes a federally insured second mortgage that counts the unit's future value and rental income, and lets the owner keep the first mortgage and its interest rate. That last point matters to the millions of owners holding loans far below today's rates. By the caucus's estimate, raising the share of U.S. homes with such units from about 1% to California's 3% would add more than a million homes.

Cheaper building materials

The agenda says the cost of materials for new residential construction rose 42% in the past five years, compared with 7% in the five years before. It cites estimates that tariffs have added nearly $11,000 to the cost of building a single-family home and that Buy America rules raise the cost of federally funded affordable housing by 15% to 25%. It calls for targeted tariff relief on residential construction materials and an exemption from those rules for affordable housing.

Whether any of this becomes law depends on the next Congress. The agenda itself lists full implementation of the ROAD to Housing Act among its goals, which suggests the same coalition intends to stay involved.

The Home-Sale Tax Bill With Support in Both Parties

Sellers have their own item to watch. The More Homes on the Market Act would double the amount of profit a homeowner can exclude from capital gains tax when selling a main home, from $250,000 to $500,000 for single filers and from $500,000 to $1 million for married couples filing jointly, and would adjust those limits for inflation each year. The current limits were set in 1997 and have never been raised.

The bill had 151 co-sponsors in the House and 23 in the Senate as of mid-August, from both parties, according to trade publication Real Estate News. It has not had a committee vote. Stand-alone tax bills rarely pass on their own, and a measure like this would most likely need to ride on a larger tax package. That gives it a possible opening later in the decade, because several temporary deductions created by the 2025 tax law, including the added deduction for taxpayers 65 and older, are scheduled to end after the 2028 tax year. Until a bill is signed, the existing limits apply to every sale. The companion piece on home-sale tax bills for older owners compares each proposal and where it stands.

The Votes Closer to Home

Zoning, permits and property taxes are decided by states, counties and cities, and voters acted on several of them the same day. North Carolina voters approved a constitutional amendment directing lawmakers to limit how much local governments can raise property tax levies, with about 60% in favor. Florida voters approved Amendment 3, which expands the homestead exemption on non-school property taxes and lowers the cap on yearly assessment increases for other property, with nearly 62% of the vote; it needed 60%. The guide to the property tax measures on the 2026 ballot explains what each one does.

What Buyers, Owners and Sellers Can Do Now

1. Buyers closing in December: confirm flood insurance requirements this week, and do not wait on Congress to shop for a rate. Rates follow inflation data and the Fed, not the election calendar.
2. Owners with a low-rate mortgage: nothing changes today. The backyard-unit loan is a proposal, and existing options such as home equity loans remain the tools available.
3. Sellers with large gains: plan around the current $250,000 and $500,000 exclusions. Keep records of capital improvements, which raise the home's basis and reduce taxable gain under any version of the law.
4. Everyone: follow local decisions. A city council vote on a subdivision or a county decision on tax rates will reach a household's budget sooner than most of what happens in Washington.

Listings, market reports and updates on housing law are published at Homes For Sale In Mesquite Nevada.