Windows of Opportunity

The “yes, in my backyard” (YIMBY) era of state-level housing legislation began with California state senator Scott Wiener’s controversial S.B. 827 (2018), which proposed to allow much taller, denser housing near transit stations across California.¹Up to that point, YIMBY activities had almost entirely focused on city reforms or individual project approvals. Although S.B. 827 failed, it opened up a new corridor for pro-homes advocacy. As three preceding reports in this series have documented, that advocacy corridor has carried a lot of freight since 2023.²

Senator Wiener, in what will likely be his last term in the state senate, tried one more time to pass legislation allowing more homes near transit. This time he succeeded. California cities have already begun the compliance process, rezoning as required.³

In this fourth annual Mercatus review of recent legislation, we once again tracked bills across the states that are intended to increase housing supply.⁴Key points from the past 12 months include the following:

• Lawmakers introduced 350 housing supply bills in 40 of the 46 states that held legislative sessions.
• Lawmakers in 28 states enacted 89 bills.
• Idaho passed key reforms including allowing accessory dwelling units (ADUs), houses on small lots, and multifamily buildings with a single egress stairway.
• North Carolina eliminated mandatory parking minimums for all uses across most of the state.
• New York legislators agreed to exempt a large share of housing development from the state’s environmental review law, which had been adding large costs and delays to most new construction.
• On the minus side, a YIMBY-era housing supply bill was repealed for the first time, in Connecticut.

High Energy in Moderate-Cost States

The YIMBY movement first emerged in places like Austin, Cambridge (Massachusetts), and San Francisco. But postpandemic national inflation, especially in housing prices, helped spread YIMBY activism to regions with below-average growth in housing demand. In 2026, it is notable that major legislation has advanced in several states with relatively moderate costs and growth rates, including Illinois, Indiana, Kansas, Michigan, and Pennsylvania.

Indiana and Kansas illustrate the range of outcomes in these newly active YIMBY states. In Indiana, legislative leaders in the house of representatives allied with the governor to advance an ambitious housing supply omnibus bill, H.B. 1001. The state senate demurred, however. In the end, a very diminished version of H.B. 1001 was passed and signed. The new law makes some procedural changes to housing development, caps fees, and requires localities to report on their housing production.

Kansas had a similar starting point but a different conclusion. Republican Senate President Ty Masterson championed an ambitious bill that allows small-lot homes statewide and streamlines permitting for both small-lot homes and ADUs. It passed both chambers with minor amendments and was signed into law by Democratic Governor Laura Kelly, making it a bipartisan reform for the state.

Political Barriers

The polar opposite of Kansas, where pro-housing legislation passed with few political obstacles, might be Hawaii, where housing costs are extremely high and have been for a long time. Even as long ago as 1990, Hawaii’s price-to-income ratio was 2.5 times higher than the national average.⁵Not surprisingly, Hawaii’s legislature considered more housing supply bills than that of any other state in the past year. But only three bills, all with modest aims, became law.

Minnesota advocates’ frustration has been even greater. After Minneapolis earned headlines as the first US city to end single-family-only zoning,⁶it seemed natural that the YIMBY momentum would carry over to the state level. Industry groups and advocates gradually built a broad coalition, and legislators debated many of the same bills year after year. But opposition, anchored by the League of Minnesota Cities, has remained firm.

In moderate-cost Illinois, Governor J. B. Pritzker took the lead in the state’s first major pro-homes legislative push. His leadership was not enough, however. Despite a well-publicized campaign and direct appeal to the voters, his ambitious and wide-ranging legislative package was stifled in the legislature. The governor and his allies will have opportunities in the second half of 2026 to negotiate for compromise reforms.

But the toughest environment for pro-homes advocates was in Connecticut, which earned the dubious distinction of effecting the first direct repeal of YIMBY-era housing supply legislation. In 2024, Connecticut had passed a law to allow multifamily buildings up to six stories to have a single egress stairway. In 2026, the state repealed that law at the urging of fire professionals.⁷

Political Breakthroughs

Stalemates do not last forever. Advocates in California and New York recently celebrated policy wins that were years in the making. The failure of S.B. 827 and its successor, S.B. 50 (2019), rerouted California legislators toward more convoluted legislative approaches. Although California passes a dozen or more bills per year to increase the housing supply, they are always contested and frequently compromised.

In the process, legislators in California have become comfortable with preempting local ordinances and setting statewide land-use policy. So when Senator Wiener brought back the idea of upzoning transit corridors, it was much less controversial. The bill takes effect gradually—but it will, by 2030, allow far more residential development within half a mile of rapid transit stations.

On the opposite coast, New York Governor Kathy Hochul and housing advocates finally broke through the difficult politics of New York’s legislature and enacted a major reform. Hochul made herself the face of housing reform with her 2023 “Housing Compact,” but she ran into a brick wall at the legislature. In the years that followed, New York earned the reputation as the state least willing to grapple with its extremely high prices and exclusionary suburban zoning. In 2026, the Empire State can finally challenge that narrative. It enacted major exemptions for housing in its onerous environmental review statute, which is responsible for delays of typically four months to two years and a high rate of lawsuits challenging housing approvals.⁸The reform will enable New York municipalities to welcome housing if they want to.

The third breakthrough in 2026 was in Virginia. With a unique political coalition, Virginia’s advocacy has focused on allowing housing on land owned by churches and other religious organizations. After years of no success, that “Yes in God’s Backyard” (YIGBY) approach finally paid off, along with several other bills, including ones legalizing accessory dwelling units, capping parking minimums near transit, and allowing Housing and Urban Development (HUD) Code manufactured homes wherever single-family homes are allowed.

Slight Slowdown

A year ago, our annual review of housing legislation reported a staggering increase in the number of housing supply bills introduced. This year, the pace cooled off, with the number of bills passed (89) and introduced (350) landing in between the 2024 and 2025 numbers. The decline is partly owing to the fact that four state legislatures do not meet in even-numbered years, and some others, such as Arkansas, have abbreviated sessions. Overall activity, however, remains extremely high by historic norms.

In addition to California and Virginia, major housing supply packages passed in Washington and Idaho (see figure 1). The two states have very different histories with pro-homes legislation. Washington had already passed almost every policy in the YIMBY playbook. This year’s package legalized residences in most commercial zones and allowed outside-the-box construction options, including scissor stairs, kit homes, and smaller elevators. By contrast, Idaho had barely touched housing supply reforms, despite experiencing years of rapid growth and rising prices. It dove into housing reform with one of the nation’s strongest minimum lot size reforms as well as legalizing ADUs, single-stair buildings, and third-party reviews of electrical, plumbing, and HVAC systems.

Policy Trends

Table 1 lists the states that considered housing supply legislation in several categories and the bills that passed in those categories, covering July 2025 through June 2026. We highlight three of those categories below.

1. Starter homes

For the first time, legislation to enable starter homes by capping minimum lot sizes became a major component of YIMBY legislative packages. Thirteen states considered strong bills to cap minimum lot size requirements; four more had weak ones.⁹States with noteworthy starter home bills include the following:

• Idaho and Kansas passed strong starter home bills. Idaho’s bill, modeled on a 2025 Texas law, allows lots as small as 30 by 70 feet in new subdivisions of at least four acres.
• Kansas’s law allows starter homes on lots of 3,000 square feet, but with less detailed provisions. The law is more promising for development in infill locations than Idaho’s law, but it may require further interpretation and implementation by state authorities.
• In addition, advocates in Massachusetts succeeded in placing a statewide minimum lot size referendum on the 2026 ballot. If voters agree, minimum lot sizes will be capped at 5,000 square feet statewide where water and sewer are available.

2. Environmental review exemptions

Beginning with Washington, several progressive states have exempted some housing developments from environmental review acts.¹⁰These review acts, sometimes called “mini-NEPAs” after the federal National Environmental Protection Act, do not contain specific environmental standards. Rather, they require a comprehensive review of the potential environmental (and sometimes social) impacts of any government decision.

• In 2025, California enacted significant exemptions from its mini-NEPA that were debated and widely publicized. That debate helped create a permission structure for four reforms in the northeast in 2026.
• New York’s new law exempting many forms of housing development from its byzantine environmental and social review process, discussed above, is likely to be even more impactful than California’s exemptions.
• In Massachusetts, Governor Maura Healey used executive action to move some housing developments to a less onerous tier of environmental review.¹¹This reform will have less impact than New York’s, because prior to the reform, Massachusetts was only reviewing about 23 residential projects per year, far fewer than in New York.¹²
• Maine’s L.D. 128 expanded an exemption from a different variety of state environmental review, so that buildings of up to four homes no longer require review. This reform was designed to harmonize with previous Maine laws that allow two to four homes per residential lot across the state.
• Vermont’s reform, S.B. 325, is the latest in a series of changes to state review of land use change under Act 250. S.B. 325 repeals and delays parts of a 2024 law that, if fully implemented, would have made it more difficult to build homes in rural areas.

The importance of these environmental review reforms is not only that they directly affect construction timelines, but that they reflect progressive lawmakers weighing difficult tradeoffs and deciding in favor of housing.

3. HUD Code manufactured homes

Housing built to the HUD Code for Manufactured Housing is the least expensive way to build a new house in the United States today. A single-section manufactured house costs less than half of a comparable site-built house, after accounting for transportation costs and attaching the unit to a permanent foundation.¹³

Many states have laws that limit their localities’ authority to zone out manufactured housing. In the past year, two states adopted strong versions of this type of policy. In Florida and Virginia, localities must now allow manufactured housing on any lot where a site-built house would be allowed, and localities are barred from adopting design restrictions that single out manufactured housing. Policymakers in four other states passed more modest protections for manufactured housing.

Looking Ahead

At the time of this publication, several state legislatures continue to advance housing supply legislation. In Michigan, a bipartisan suite of bills covering starter homes, ADUs, and permitting reforms is currently moving through the state’s full-time legislative body. Similarly, Pennsylvania’s legislature is considering bills to reform occupancy restrictions, permit ADUs, permit single-stair apartments, and expedite permitting. In Massachusetts, end-of-session negotiations include provisions to allow apartments in commercial zones, reform site plan review, and legalize duplexes statewide. Since the end of our analysis window (July 1, 2025, through June 30, 2026), Delaware has passed permitting reforms. North Carolina has as well, in a major new law that also legalizes multifamily construction in commercial zones and ADUs in large jurisdictions. The law also aligns the state's manufactured-home definitions with a new federal standard, easing the use of future lower-cost models.

2027 could prove a test case for the durability of pro-housing momentum. Of the 36 gubernatorial races in 2026, 18 do not involve an incumbent, due to term limits or retirements.¹⁴As new political leadership emerges across states, the political viability of pro-housing reforms may change. The repeal of Connecticut’s single-stair law shows YIMBY-era reforms are not invulnerable. It’s likely that YIMBY advocacy will include some defense in the coming years. Nevertheless, the past year demonstrates that policymakers continue to take housing affordability concerns seriously.

About the Authors

Salim Furth is a senior research fellow and director of the Urbanity Project at the Mercatus Center at George Mason University. His research focuses on housing production and land use regulation. He frequently advises local governments and testifies before state and federal legislatures. He earned his PhD in economics from the University of Rochester.

Josh Ferdelman is the program manager of the Urbanity Project at the Mercatus Center at George Mason University. His work focuses on connecting economic and legal research to state and local policymakers. He received his JD from The Ohio State University School of Law.

Emily Hamilton is a senior research fellow and director of the Urbanity Project at the Mercatus Center at George Mason University. Her research focuses on urban economics and land use policy. She publishes both academic research and policy work. Her writing has appeared in outlets including the Washington Post and the Los Angeles Times, and she writes an occasional column at Governing. Hamilton has testified before several state legislatures as well as the US House of Representatives. Hamilton serves on the advisory boards of Up for Growth and Cityscape, a journal published by the Department of Housing and Urban Development. She received her PhD in economics from George Mason University and is an alum of the Mercatus MA Fellowship.