The Build America, Buy America (BABA) Act, which mandates the use of American-made iron, steel, manufactured products, and construction materials in federally funded infrastructure projects, is creating significant delays and cost increases for affordable housing developments, according to industry reports. The law, part of the 2021 Infrastructure Investment and Jobs Act, applies to projects receiving federal financial assistance, including many affordable housing initiatives.
Affordable housing developers and advocates state that compliance with BABA's domestic content requirements is causing procurement bottlenecks for critical building components. Items such as HVAC systems, electrical panels, lighting, and plumbing fixtures must now be sourced from U.S. manufacturers, leading to longer lead times and higher prices compared to globally sourced materials. The National Association of Home Builders and other groups have highlighted these challenges in recent congressional testimony.
While the law aims to bolster domestic manufacturing, its implementation has raised concerns about unintended consequences for housing affordability. The U.S. Department of Housing and Urban Development (HUD) has issued waivers for certain products when domestic options are not available or would increase project costs by over 25%, but developers report the waiver process itself can be slow. The tension between industrial policy and housing policy continues to be a point of debate as agencies work on implementing the rules.
