North Carolina legislators have spent several years attempting to pass meaningful statewide housing reform to address the state's ongoing housing crisis. These efforts have yielded only halting progress.

Like other states, Tar Heel lawmakers face persistent resistance from local governments that fear ceding control over their zoning, and from neighborhood groups intent on retaining influence.

In June, however, state lawmakers adopted a different approach by transforming legislation whose genesis was a modest revision of statewide private swimming pool regulations into a sweeping, politically polarizing overhaul of local government and housing policy.

Dubbed the “Save the American Dream Act,” the bill aims to tackle North Carolina’s housing affordability, and it does so by fundamentally streamlining and limiting the "home rule" authority of municipal governments over local land-use and development regulations.

The state legislature's bid for sweeping new authority to clear roadblocks to local housing development strikes at the core of a long-contested balance of powers issue in North Carolina – and other states – pitting adherents of local "home rule" against supporters of the "Dillon Rule" that gives state lawmakers greater sway over localities in matters such as residential zoning, land use, and permitting.

An article in The Carolina Journal notes:

The distinction between whether a state applies the Home Rule or Dillon rule is a murky one, as some have argued in the past that courts have varied interpretations of each rule depending on the jurisdiction and the facts of the case. This explanation leads to a conclusion that North Carolina is neither a Home Rule nor a Dillon Rule state."

A Pandemic Era Flare-Up

During the COVID-19 pandemic, North Carolina experienced significant population growth, ranking among the southern states’ biggest winners. A study published by the North Carolina Chamber Foundation in February projects a 5% rise in households, adding more than 218,000 between 2024 and 2029. However, the state faces a five-year housing inventory gap of over 764,000 units, with 322,360 units needed for rental purposes and 442,118 for sale.

The numbers are immense, so we think working towards solutions to help keep a strong workforce in the communities they work and want to live in is very important,” says Jake Cashion, VP, government affairs for the NC Chamber of Commerce, in an interview with The Builder’s Daily. “However, they are being priced out, and the American Dream is just that for younger folks now.”

The “Save the American Dream Act” is one of several bills introduced to address the state’s housing challenges.

One would require local governments to permit at least one accessory dwelling unit in areas zoned for single-family residences. Another would allow by-right residential development in commercial areas.

Lawmakers are also attempting — again — to authorize “missing middle” housing, such as duplexes and multi-unit buildings in residential zones. A similar attempt failed in 2021 due to opposition from the local government.

Charlotte changed its zoning in 2023 to allow development of missing-middle housing types across the city, although opponents continue to attempt to roll back aspects of the new code. Durham, meanwhile, ended single-family zoning in 2019.

Despite widespread opposition from local government groups, only the “Save the American Dream Act” has made meaningful progress through the state legislature so far.

The North Carolina Association of County Commissioners posts on LinkedIn that stripping local leaders of the ability to manage growth and plan for infrastructure, safety, and community needs will not solve the housing crisis.

That won’t build affordable homes—it will only create confusion and distrust,” the organization states.

Cashion emphasizes that the legislation aims to address some of these concerns.

It has gone through some changes and is very close to being worked out, and we are excited about that and advocating for it,” he says.

Legislative Provisions and Controversy

A Senate bill initially focused on regulating swimming pools and passed unanimously in April. However, when the bill reached the House Committee on Regulatory Reform, members added wide-ranging reforms from previously stalled House Bill 765, transforming the proposal into what critics called a legislative Trojan horse.

Key housing provisions now include:

• Restricting local governments’ authority to enact zoning, subdivision, and building regulations stricter than state law, except relating to floodplain management.
• Mandating timelines and administrative processes for local development approvals and rezoning, with expanded opportunities for judicial review of municipal planning decisions.
• Expanding property owner rights, strengthening their recourse to challenge denied permits legally.

Supporters claim the bill provides essential relief for a strained housing market and increases predictability for developers and homeowners by leveling the regulatory field and removing barriers to construction.

Critics—including local officials and environmental advocates—argue that the legislation centralizes power, erodes local democracy, and threatens carefully crafted community standards on issues such as historic preservation, tree canopy protection, and stormwater management. Many of the most aggressive proposed restrictions on local control remain present in the current legislation.

The Road Ahead

Cashion acknowledged the legislation does not fully solve the state’s housing challenges. He pledges continued work in future sessions on issues such as local regulations, permitting, and zoning reforms.

It’s that important, and we hope that local governments would join us, be proactive, and modernize their regulations, which stifle opportunities for working families and others,” he said.