Made in America law is causing problems for affordable housing developers

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Affordable housing developers and housing advocates say the federal government’s “Build America, Buy America” requirements are adding delays and costs to building units as the country continues to struggle with affordability. The “Build America, Buy America” framework, known as BABA, is intended to boost domestic manufacturing, but developers say a waiver process is moving slowly when affordable housing projects need items that are not available as U.S.-made products.

BABA generally requires that many components used in federally funded projects—ranging from HVAC systems and lighting to ceiling fans and sink hooks—be produced in the United States, according to builders seeking waivers. Developers said they can apply for exemptions when products are not made domestically, but they described waiver approvals as taking a long time and said the process has become close to a standstill while the U.S. Department of Housing and Urban Development reviews requests.

“They need to be treating this like the fire that it is,” said Tyler Norod, president of Westbrook Development Corporation, which builds affordable housing in Maine. Norod said his company and other developers have been forced to adjust because the waiver workflow has not kept pace with construction timelines. In the same account, Westbrook’s president said developers may end up building fewer units during a housing crisis.

Developers described the compliance and waiver workload as particularly difficult for smaller nonprofit builders and projects with tight budgets. Beyond Shelter CEO Dan Madler said he was building a 36-unit building for people on affordable housing waitlists but had to postpone lumber orders to verify compliance requirements and to find ceiling fans made in America, while also not knowing when HUD would approve a waiver.

For renters, the delays can stretch the time to getting a unit. Diana Lene, 75, described being on affordable housing waitlists for the past five years in Fargo, North Dakota, while trying to manage on Social Security. She said, “It’s just maxing my budget down to pennies,” and added that she is “just trying to keep a roof over my head, but it’s getting more and more difficult,” language that the Associated Press included as part of its reporting on how housing costs affect people with limited incomes.

Other developers said the compliance burden is widespread across supply chains. Denver developer Julie Hoebel said she had spent more than $60,000 on a consultant to locate American-made materials and to work through requirements for an affordable housing project, and she said waivers she submitted in November for around 125 materials in an 85-unit building had not been approved. Hoebel said, “If they take much longer then we’ll come to a standstill.”

The Associated Press reported that HUD is taking at least six months to approve many waivers. Even some BABA supporters, according to the reporting, said HUD needs to grant waivers more quickly and provide clearer instructions for preparing applications; the article also noted that HUD did not answer AP questions about the delays when contacted. In a statement, HUD 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.”

The policy has been in place since President Joe Biden signed it in 2021 as part of the Infrastructure Investment and Jobs Act. The law applies to infrastructure projects funded by federal agencies, not just affordable housing, but developers say the practical impact on HUD’s affordable housing pipeline is significant because many projects rely on specific product categories with established import supply chains.

Supporters of BABA said the rules should push suppliers to adjust over time, including by shifting toward domestic production. Scott Paul, president of the Alliance for American Manufacturing, told AP that “You’ve got a system in place that leans heavily on using imported materials to make a better profit,” and said he does not know whether that “serves the public good.” Union leaders representing the steel and manufacturing industries have similarly argued that taxpayer dollars should fund American-made materials.

However, critics said the waiver and compliance requirements were implemented before the domestic manufacturing capacity needed to satisfy them was in place. Jennifer Schwartz, director of tax and housing advocacy at the National Council of State Housing Agencies, told AP there is “no national data” tracking how much BABA has increased costs but said the waiver process is “failing” because requirements were set without first assessing U.S. manufacturing capacity. Kaitlyn Snyder, managing director of the National Housing and Rehabilitation Association, said some categories of products—such as manufactured appliances and other equipment—may take time to become available in sufficient quantity and said, “I don’t know that it economically, financially makes sense for people to be producing door hinges,” adding that the U.S. has “outsourced a lot of that stuff.”

Other stakeholders said HUD’s handling of the implementation and exemptions has also affected compliance planning. Jessie Handforth Kome, who spent nearly 40 years working at HUD and retired in 2024, said, “The process isn’t working for affordable housing,” and that it is “unclear how to.” Developers also reported spending substantial time and money on verification steps. Vermont-based developer Jessica Neubelt said she spent additional resources to verify that iron and steel used in a project met the American-made standard and said that effort took hundreds of hours that could have been directed to other work.

The debate is spilling into Capitol Hill, with lawmakers and unions arguing over how much flexibility HUD should provide. U.S. Rep. Mike Flood, a Nebraska Republican, has advocated exempting some HUD funding from BABA, telling AP that “Owning a home is the American dream,” while he said the rules can make that dream “out of reach” by adding costs. Roy Houseman, legislative director at United Steelworkers, said complaints about increased costs are overblown and argued that some developers are seeking statutory changes rather than making what he described as good-faith efforts to push HUD to respond.

The law allows some leeway, Houseman and union leaders said, including exemptions for an American-made product when it raises the project’s overall cost by more than 25%, and a small portion of total material costs can also be exempt. But developers told AP that, for many projects, that flexibility does not cover enough of the materials that are not available domestically.

Some builders said the waiver bottleneck is pushing them to reduce their reliance on federal funding. Kentucky developer Scott McReynolds said instead of seeking a grant to build 20 to 30 affordable homes, he planned smaller projects—two four-unit projects—because the scale might keep them from being subject to BABA. He said American-made materials are especially hard to find near the rural areas he serves and called the situation “a nightmare.”

HUD’s secretary, Scott Turner, also addressed questions about whether affordable housing should be exempt from BABA in January, saying the agency was looking into the issue and that HUD was seeking “flexibility to certain projects in certain places around our country.” Turner said HUD was committed to ensuring developers get the flexibility they need in building, according to the Associated Press report.