Federal rules known as Build America, Buy America (BABA), enacted under the 2021 Infrastructure Investment and Jobs Act, are delaying affordable-housing construction across the United States by requiring many building components to be made in the U.S. Developers and nonprofit builders report multi-month hold-ups as they await waivers or hunt for American-made parts, raising costs and threatening the delivery of new units to low-income residents. The backlog has hit projects from rural Kentucky to Fargo, North Dakota, and builders say they face both higher bills and the prospect of building fewer homes at a time of acute housing need. Federal housing officials say they are reviewing how BABA applies to HUD-funded projects, but developers say waiver approvals have been slow and opaque.
Key Takeaways
- Build America, Buy America (BABA), signed in 2021, requires many federally funded project materials to be U.S.-made, affecting affordable-housing developments nationwide.
- Developers report HUD waiver approvals commonly take six months or more; some waiver requests remain pending for months, stalling construction schedules.
- Examples of direct costs include a Denver developer who spent more than $60,000 on consultants to identify compliant materials and a Vermont developer who logged roughly $150,000 in added verification expenses.
- Specific projects delayed include a 36-unit nonprofit building and an 85-unit project with waivers for about 125 items still awaiting HUD action.
- Waiver rules allow exemptions when American-made requirements raise total project costs by more than 25%, but builders say the threshold and limited scope leave many items uncovered.
- Some developers are avoiding federal funds or scaling projects down to evade BABA triggers, which can reduce the overall number of affordable units produced.
- Labor unions and manufacturing advocates support BABA for restoring domestic production and jobs; housing advocates call for faster, clearer waiver procedures to prevent supply bottlenecks.
Background
The Build America, Buy America provision was folded into the 2021 Infrastructure Investment and Jobs Act to ensure federal dollars favor U.S. manufacturing. BABA applies broadly to infrastructure spending administered by federal agencies, including certain HUD-funded affordable-housing grants and loans. Supporters argue the rule helps rebuild domestic supply chains and sustain American industrial jobs after pandemic-era disruptions.
Affordable-housing developers historically sourced many components—appliances, lighting, ceiling fans, even some fixtures—from overseas suppliers because of lower unit costs and steady availability. The sudden pivot to a domestic-preference requirement requires builders to document origins for hundreds of material types, often down to small parts and fasteners, creating administrative workloads for both industry and agency staff.
HUD’s internal capacity also matters: developers and former agency officials note that HUD staffing was reduced in prior years, complicating the agency’s ability to process the volume of waiver petitions and compliance reviews now required. The result is a growing disconnect between lawmakers’ intent to favor U.S. products and the practical pace of delivering federally assisted housing.
Main Event
Multiple developers told reporters they are postponing orders, pausing projects or spending tens of thousands of dollars on compliance work while waiting for HUD to act on waiver requests. In one example, a nonprofit builder paused a lumber order for a 36-unit project because certain items could not be confirmed as American-made and a ceiling-fan supplier could not demonstrate domestic production. The developer does not have a timeline for HUD to decide the waiver.
In Denver, a developer said she spent more than $60,000 hiring a consultant to comb supplier catalogs and make phone calls to confirm the origin of dozens of materials. For an 85-unit project she submitted waivers for roughly 125 material lines in November; months later many remain unresolved, leaving procurement and scheduling in limbo.
HUD has granted only a small share of waiver requests for housing projects, according to builders’ accounts. Agency statements to the press emphasize a commitment to U.S. industry while noting the department is monitoring cost impacts on builders. HUD Secretary Scott Turner said in January the department is reviewing how to provide flexibility for particular projects, but gave few specifics on timing or criteria.
Smaller and rural developers describe acute trouble sourcing American-made items locally, which raises transportation time and cost as well. Some builders responding to the rule’s uncertainty are choosing to pursue private financing or smaller-scale projects that avoid federal triggers altogether, shrinking the pipeline of federally assisted affordable units.
Analysis & Implications
In the near term, the principal consequence is construction delay. Pending waivers and procurement holds push project timelines out by months, increasing financing and labor carrying costs—expenses that either reduce developer margins or require additional subsidy to keep rents affordable. When federal funds are essential to a project’s budget, even modest delays can force costly re-bids or jeopardize tax-credit deadlines.
Over a longer horizon, BABA could stimulate new domestic production for building components, but that transition is uneven. Raw materials such as American steel and lumber are more readily scaled up; specialized manufactured goods—certain appliances, elevators, and electrical components—require more time and capital to reshore at competitive prices. Industry experts say suppliers will respond to demand, but the lag matters when the housing shortage is immediate.
The policy trade-off is between industrial policy and housing delivery. Proponents argue BABA captures taxpayer value by supporting U.S. workers and reducing reliance on foreign supply chains. Opponents and many housing providers counter that mandated timing and documentation without rapid administrative mechanisms can slow down the very projects the law funds, undermining housing access goals.
Comparison & Data
| Metric | Reported Example |
|---|---|
| Consultant/compliance fees | $60,000 (Denver developer) |
| Verification/added costs | ~$150,000 (Vermont developer) |
| Waiver items filed | ≈125 material lines (85-unit project) |
| Typical reported waiver review time | 6 months or more (builders’ accounts) |
These figures illustrate out-of-pocket expenses and timeline pressures developers report; there is not yet comprehensive national data quantifying BABA’s aggregate cost impact on all affordable-housing projects. Industry groups are calling for HUD to publish clearer guidance and processing benchmarks to reduce uncertainty.
Reactions & Quotes
Developers and advocates offered contrasting perspectives on whether the rule is the problem or its implementation.
“We’ve sort of resigned ourselves that we’re just gonna build less units across the entire country during a housing crisis.”
Tyler Norod, President, Westbrook Development Corporation
Norod’s remarks capture a common industry concern that administrative friction translates to fewer completed units during a period of acute need.
“We are looking at this … with BABA as it pertains to HUD to provide flexibility to certain projects in certain places around our country.”
HUD Secretary Scott Turner
Turner indicated HUD is exploring targeted flexibility but provided limited detail on timelines or criteria, leaving developers seeking certainty.
“You’ve got a system in place that leans heavily on using imported materials to make a better profit.”
Scott Paul, President, Alliance for American Manufacturing
Manufacturing advocates stress the law’s purpose: shift taxpayer-funded purchases toward domestic suppliers and encourage reshoring over time.
Unconfirmed
- No comprehensive national estimate yet exists quantifying how much BABA has increased total affordable-housing construction costs nationwide.
- Exact average HUD waiver processing times are not publicly released; the six-month figure reflects developers’ reports, not an official HUD average.
- Claims that HUD staffing cuts were the direct cause of current waiver backlogs are reported by industry sources but remain subject to agency review and confirmation.
Bottom Line
Build America, Buy America aims to strengthen U.S. manufacturing with federal procurement policy, but in its current implementation it is introducing delays and added expense into federally assisted affordable-housing projects. The most immediate harm is schedule slippage and higher carrying or compliance costs that can reduce the number of completed units when demand is highest.
Policymakers face a choice: double down on enforcement and support reshoring with parallel investments in domestic capacity, or provide faster, clearer waiver pathways and transitional relief for housing projects where domestic supplies are unavailable. Short-term fixes—more HUD staffing, published timelines, and clearer templates for waiver submissions—could reduce bottlenecks while longer-term market adjustments take place.
Sources
- Associated Press (news report)
- U.S. Department of Housing and Urban Development (official agency)
- Alliance for American Manufacturing (industry advocacy)
- National Council of State Housing Agencies (housing policy organization)