North Carolina lawmakers swung for the fences again with major housing reform. They ended up with a base hit.

The sole legislative success was House Bill 926, a deregulatory act aimed at streamlining development by preventing cities from setting building codes more stringent than state minimums.

A more aggressive proposal, which faced resistance from municipalities worried about losing local zoning control, stalled largely because of a budget impasse in the General Assembly. Even with the bill that passed, municipalities lose some power.

North Carolina's years-long struggle reflects a broader national battle over how to solve an escalating affordability crisis.

Across the country, state legislators and governors are striving to pass laws to increase housing supply, but often clash with local governments determined to protect their zoning authority.

This fundamental tension between state preemption and "home rule" makes comprehensive reform politically difficult, often leading to incremental, piecemeal measures rather than the sweeping changes advocates seek.

States like California and Oregon have managed to pass significant reforms. Still, even those efforts were preceded by years of debate. They faced intense opposition, illustrating just how challenging it is to build the political consensus needed for a major policy overhaul.

North Carolina Gov. Josh Stein allowed HB 926 to become law without his signature as more significant housing initiatives faltered.

The bill includes a handful of common-sense regulatory reforms, and I appreciate the legislature’s engagement with state agencies on a number of the provisions,” Stein said in a statement.

Stein, however, took issue with provisions that alter state water quality regulations by amending wastewater and stormwater rules in ways that would limit local government authority to impose standards stricter than the state's rules.

Housing Programs Suffer

N.C. Lawmakers have not passed a comprehensive biennial budget for 2025–2027, leaving the state operating on a continuing resolution that maintains prior-year funding levels.

Budget proposals from both the House and Senate had either eliminated or drastically reduced funding for key housing programs.

The Workforce Housing Loan Program, for example, received no funding in the Senate’s budget and only $5 million in the House’s version. At the same time, the Healthy Opportunities Pilots program, which provides housing support services, was left without funding in both proposals.

The resulting law, HB 926, titled the Regulatory Reform Act of 2025, does not create new programs or allocate funds.

The Reforms in House Bill 926

Key provisions in the new law prevent municipalities from imposing several specific local rules:

• Setting a minimum square footage for homes subject to the North Carolina Residential Code.
• Requiring parking spaces to be larger than 9 feet by 20 feet, with exceptions for disability and specific parking layouts.
• Mandating more fire apparatus access roads for one- and two-family developments than what is required by the state’s fire code.
• Establishing pavement design standards for roads that are stricter than the minimums set by the N.C. Department of Transportation.

Proponents argue these are common-sense measures that can help streamline development and address the state’s severe housing shortage, which is projected to exceed 760,000 new units by 2029.

The bill also drew criticism for a provision that exempts properties owned by the University of North Carolina in several counties from most local zoning and development regulations.

Ultimately, the passage of HB 926 against a backdrop of stalled funding and broader reforms paints a picture of a state struggling to mount a cohesive response to its housing challenges.

Stalling the Zoning Takeover

Lawmakers had sought to shift zoning authority from local governments to the state to a significant extent. In the Senate, lawmakers transformed a modest bill to regulate private swimming pools into a broad overhaul of housing policy by pulling in much of what the House bill, the "Save the American Dream Act," contained.

While supporters claimed the act would add predictability for developers, it drew fire from critics, including local government groups, who argued it would erode community standards and local democracy.

This bill could see new life when the state legislators convene for a short session beginning in January.

State Rep. Jeff Zenger, who sponsored the "Save the American Dream Act," said on a podcast that municipalities started asking him about the bill's details, and they liked what they heard.

Eventually, we will get a bill," Zneger said, adding he's not sure if it would pass in the legislative term. "My hope is absolutely [it can] because we need it yesterday."