Zoning Is the Real Barrier: What the ROAD to Housing Act Does (and Doesn't Do) for HUD Code Homes

The single biggest obstacle to expanding manufactured housing isn't construction cost, financing, or stigma alone - it's zoning. Here's what changed federally, what states are already doing about it, and what still has to happen at every level.

Generated and edited by Chris Nicely, President & CEO, LANE Associates, LLC

The Barrier Has Always Been Local

For as long as HUD Code manufactured housing has existed as a federally regulated category, its biggest constraint hasn't been the federal standard - it's been the roughly 30,000 local zoning authorities across the country that decide, lot by lot, whether a HUD Code home is even a legal option. A homeowner can build a cheaper, safer, code-compliant factory-built home and still be unable to place it on an ordinary residential lot simply because the local ordinance never contemplated manufactured housing as anything other than agricultural-zone or mobile-home-park use.

The 21st Century ROAD to Housing Act, allowed to become law July 11, 2026, is the first major federal housing bill to name that problem directly. But it's worth being precise about the difference between what Congress changed outright and what it merely pointed toward. BIG difference.

What the Act Changed on Zoning

•     Named manufactured housing explicitly. The House-passed text lists allowing manufactured homes in areas zoned primarily for single-family residential use as one of the reform actions HUD should promote, grouped alongside duplexes, triplexes, and fourplexes. This is the first time manufactured housing has appeared by name, on equal footing, in a federal zoning reform push.

•     Directed HUD to publish guidance. Section 107 requires HUD to develop best-practice frameworks that states and localities can use to modernize zoning codes that predate factory-built housing as a category.

•     Eliminated the permanent chassis requirement. Not a zoning change directly, but it changes the product zoning boards are evaluating, potentially saving $5,000–$10,000 per home and enabling two-story designs that look and site like conventional homes, hopefully resulting a change in the perception of manufactured homes.

•     Created a modest financial nudge. The Innovation Fund (PRICE) can reward jurisdictions that voluntarily expand housing supply, authorized at $200 million per year nationally, small relative to the scale of the shortage.

What the Act Did Not Change

Local zoning authority is untouched. Section 107 is explicitly non-binding, HUD can publish guidance, but the statute disclaims any authority to penalize a jurisdiction that ignores it. The Innovation Fund can't be used to mandate zoning changes, only to reward voluntary ones.

And nothing in the Act takes legal effect until HUD completes formal rulemaking, a process that historically runs one to three years or more.

In short: Congress removed a federal product barrier and issued a federal suggestion. It did not preempt a single local zoning code. That means the real fight over exclusionary zoning now moves to the states, with several states having already shown what an effective fix looks like.

The State Models Already Working

Here's the current lineup of states that have already passed by-right, all-residential-zone mandates for HUD Code manufactured housing (assuming other neutral standards like foundation, size, and design are met):

Already in effect or enacted:

·       California - Gov. Code § 65852.3: manufactured homes must be allowed on any lot zoned for site-built single-family use, held to the same development standards.

·       Maryland - HB 538 (2024): bars localities from prohibiting manufactured/modular homes in any single-family zone; historic-district standards are the only carve-out.

·       New Hampshire - HB 1361 (2024) plus the newer HB 1357: municipalities can't wholesale exclude manufactured housing from residential districts, and silence in a local ordinance now defaults to "permitted."

·       Maine - legalized manufactured housing wherever single-family dwellings are allowed, part of the same 2024 wave as Maryland.

·       Montana - grouped in the same "override local zoning" category per recent tracking, though I'd verify the exact statute language if you need it for a client-facing piece.

·       Virginia - 2026 law, effective July 1, 2026: manufactured homes allowed in any residential zone that permits site-built housing; localities barred from applying different or stricter standards.

·       Kentucky - KRS 100.348, effective July 1, 2026: requires "qualified" manufactured homes in all single-family residential zones statewide; localities can't apply architectural standards stricter than those for site-built homes. Cities like Paducah and Berea are actively amending their local codes right now to comply.

Coming soon (enacted, not yet effective):

·       Florida - HB 399, signed March 27, 2026, takes effect January 1, 2027. This one is notably strong: it requires "off-site constructed residential dwellings" (both manufactured and modular) by right in any zone allowing single-family detached homes, voids any conflicting local ordinance automatically with no grandfathering, and courts are empowered to enjoin noncompliant local rules.

·       Texas - SB 785, takes effect September 1, 2026: requires most Texas cities with zoning to designate at least one by-right residential district for HUD Code homes (a narrower mandate than Florida/Virginia — "at least one district," not "every single-family zone"). TMHA estimates roughly a third of Texas's 1,200+ cities will need to update their zoning maps to comply.

Close but not there yet:

·       Rhode Island - a similar bill passed the House but is still awaiting Senate action, so not law yet.

The strongest versions of these laws (CA, VA, MD, FL, KY), "must allow" with "must use the same standards as site-built homes" - closing the design-review loophole. Texas's law seems to be the “less good” (still an improvement over what was in place) as a weaker "at least one zone" model rather than "every single-family zone," which is worth noting.

What Still Needs to Happen – Step by Step

Federal: Complete the rulemaking

None of the ROAD Act's manufactured housing provisions are enforceable until HUD adopts implementing regulations for the chassis elimination and finalizes the Section 107 guidance. This is the window where industry engagement in the public comment process has outsized leverage - the statute sets direction, but the regulatory text will determine how much teeth the guidance actually has. This may take as much as 2-3 years to complete.

State: Pass "same standards" legislation

This is the where we can have the most impact short term. States that haven't acted should be pushed toward the California/Virginia/Maryland/Kentucky model: by-right placement in any zone allowing single-family use, combined with a prohibition on applying stricter standards to manufactured homes than to site-built homes on the same lot. New Hampshire's default-to-permitted clause, where local silence on manufactured housing means it's automatically allowed, not automatically excluded, is a particularly effective drafting technique other states could adopt, but seems to me to be potentially less inclusive.

Local: Update the mental model, not just the code

Even where state law changes, local building officials, planning boards, and appraisers are often still evaluating a decades-old image of manufactured housing, single-story, chassis-bound, visually distinct from site-built homes. Virginia's bill sponsors said this outright: the stigma, not the statute, is frequently the real barrier once the legal path is open. With the chassis requirement gone and two-story HUD Code homes now feasible, the product itself is part of the case that needs to be made directly to local decision-makers. We MUST continue to orient people on Today’s Manufactured Housing, and all of its benefits.

Industry: Close the parity gap beyond zoning – YES WE still have work to do too!

Legal access to a lot solves only part of the problem. Manufactured homes still frequently appraise and finance differently than site-built homes even after zoning barriers fall, because appraisal practice and some conventional lending standards still treat them as a separate, lower-value asset class. The ROAD Act's FHA loan limit increases for manufactured housing are a start, but appraisal parity is a distinct fight that has to run in parallel with the zoning campaign, not after it.

In Conclusion…

The ROAD to Housing Act gives the manufactured housing industry something it hasn't had before: explicit federal acknowledgment that exclusionary single-family zoning applies to HUD Code homes, a less expensive, more versatile product, to bring to the table. But the Act is a floor, not a ceiling. Real inclusion won't come from Washington, it will come from state legislatures willing to pass "same standards" laws, local officials willing to update an outdated image of what a manufactured home actually is, and an industry willing to make the zoning case as an affirmative argument for supply, not just a defensive one against exclusion.

The ROAD to Housing Act is the starting gun, not the finish line. LET’s GO!!!