Buy America Law Stalls Affordable Housing

Lead paragraph

The Build America Buy America (BABA) requirements have emerged as a material constraint on affordable housing production, according to reporting by Fortune on Mar 27, 2026 (Fortune, Mar 27, 2026). Developers and non-profit builders say routine fixtures — from ceiling fans to door hinges — are difficult to source domestically at scale, producing procurement delays that compound an already acute housing shortage. The law, enacted as part of the Infrastructure Investment and Jobs Act (IIJA) signed Nov 15, 2021, mandated domestic content for federally funded projects and delegated many implementation details to agencies; that delegation has produced heterogenous interpretations and a growing backlog of waiver requests. With the National Low Income Housing Coalition estimating an affordable housing gap on the order of roughly 7.3 million units in recent years (NLIHC, 2024), operational frictions in federal procurement now have real consequences for delivery timelines and budgets. This analysis assesses the data points available, the transmission mechanism from procurement rules to project delays, and where institutional investors and program administrators should focus monitoring and contingency efforts.

Context

The Build America Buy America provisions were folded into broader federal infrastructure legislation on Nov 15, 2021, and agencies rolled out implementation guidance over subsequent years (IIJA, Nov 15, 2021). The statute's intention—to increase domestic manufacturing and preserve jobs—aligns with longstanding industrial-policy objectives. However, the law's operational complexity has intersected with pandemic-era supply-chain fragmentation and sector-specific concentration in fasteners, electrical components, and HVAC equipment. Fortune's March 27, 2026 article documented anecdotal evidence from nonprofit builders and municipal authorities that common, low-cost components are often unavailable in U.S. supply chains at required volumes (Fortune, Mar 27, 2026).

Procurement officials were given waiver authority to permit non-domestic sourcing where domestic material is not available, but the waiver process has been criticized as slow and inconsistent across agencies. Federal agencies have different material thresholds, certification forms and timelines, which in practice create friction for developers running projects that intersect multiple programs. The result is an operational environment where a single delayed waiver can stop on-site construction, as installers are required to confirm Buy America compliance before new product lines are accepted. That dynamic converts a regulatory bottleneck into a hard construction stoppage with scheduling and cost implications.

The broader macro backdrop is important. The U.S. construction pipeline is still digesting post-pandemic input-cost inflation and labor shortages. Even without Buy America constraints, multifamily and affordable housing projects have faced extended lead times: in many regions, permitting and supply chain lead times continue to be materially longer than the 2018–2019 baseline. The confluence of regulation and constrained supply elevates delivery risk for projects financed with layered federal, state and local subsidies where timing is integral to fiscal and service outcomes.

Data Deep Dive

Primary public data points remain limited, so near-term analysis must triangulate from government notices, industry surveys and investigative reporting. Fortune's Mar 27, 2026 reporting provides qualitative confirmation from multiple builders that waiver processes are not functioning as intended; the article quotes regional developers and municipal staff describing repeated delays (Fortune, Mar 27, 2026). The IIJA enactment date of Nov 15, 2021 is the legislative anchor for the statute (Congress.gov, IIJA, Nov 15, 2021). The National Low Income Housing Coalition's most recent gap estimate — about 7.3 million affordable and available rental homes short for extremely low-income renters as of its latest published dataset — contextualizes the scale of the service shortfall if projects are delayed or cancelled (NLIHC, 2024).

Industry-level indicators corroborate that certain commodity lines remain concentrated internationally. Trade data and import dependence for small manufactured goods — screws, hinges, metal fixtures — show elevated import shares relative to domestic production capacity in selected subsegments. Where component markets are concentrated in a handful of overseas suppliers, the requirement to pivot to domestic producers implies either a time-consuming qualification and scale-up or acceptance of higher prices. For municipal and nonprofit projects operating on thin subsidy margins, both outcomes create funding stress: either schedules extend and carrying costs rise, or budgets must be increased to secure domestic-sourced inputs.

Comparative timelines are instructive. Projects funded by non-federal sources or executed prior to the BABA rollout did not face the same document-level gating; anecdotal reporting suggests procurement lead times for fixtures have increased versus the 2019 pre-pandemic baseline — a comparison that highlights the regulatory overlay on existing supply issues. YoY comparisons for federal procurement metrics are not yet standardized across agencies, but contracting officers report greater administrative time per award due to domestic content review steps, effectively increasing the soft-cost component of federal grant management.

Sector Implications

The most directly affected sectors are affordable housing developers (nonprofits and public housing authorities), manufactured-goods suppliers to construction, and secondary markets such as modular builders who rely on integrated supply chains. For developers, the immediate economic channel is schedule slippage: delayed occupancy dates reduce cash flow, potentially trigger subsidy recapture or require bridge financing at higher cost. Those financing stresses are particularly salient for projects that use layered low-income housing tax credits and HOME or CDBG funding where timing benchmarks are contractual.

Manufacturers in the U.S. could be net beneficiaries over time if policy certainty leads to domestic capacity investment. However, the short-to-medium-term adjustment requires capital expenditure that producers may not pursue without clear demand signals or contract visibility. Small-scale manufacturers with capacity to scale face long lead times to retool and hire, while large incumbents may prioritize higher-margin products over low-cost fixtures. This means that while the policy is pro-domestic manufacturing in intent, the lived transition will likely take multiple years and will not be uniform across product categories.

From a governance perspective, public agencies and philanthropic capital providers that underwrite housing programs must reconsider project monitoring and contingency mechanisms. Programs that do not explicitly budget for extended lead times or domestic-premium pricing will encounter execution risk. Investors and program managers should therefore integrate procurement-readiness metrics into project approval frameworks and consider staged funding that accounts for potential waiver timelines. For broader markets, the policy introduces a novel risk factor in municipal and social-infrastructure projects that is not captured in traditional credit models.

Risk Assessment

Operational risk is the near-term front-runner: procurement delays translate directly into schedule risk, which then morphs into financial risk for projects with fixed-rate bridge loans or strict subsidy timelines. Reputational and policy risk follow: if federal programs are perceived as failing to deliver promised units, political pressure will mount to modify rules or increase waivers — creating regulatory uncertainty. Implementation risk is elevated by inter-agency variability and the administrative capacity of small non-profits to navigate complex federal rules.

Market risk to domestic manufacturers is asymmetric. Firms that can scale will gain market share, but many will face margin compression if forced to accept low price points for basic fixtures. There is also the risk of suboptimal substitution: domestic products that meet the Buy America threshold but are inferior in quality or cost-effectiveness could generate long-term maintenance liabilities for housing providers. Conversely, a successful domestic build-out would increase domestic supplier diversity and reduce import dependence, but that outcome requires coordinated procurement signals and several years of investment.

Policy risk should not be underestimated. Congressional and administrative responses could alter the current trajectory: Congress could amend thresholds, or agencies could streamline waiver processes via rulemaking. Such changes would create an inflection point for both procurement practices and capital deployment strategies. Institutional investors and sponsors should track formal Federal Register notices, agency guidance memos, and program-level waiver statistics as proximate indicators of policy evolution.

Outlook

Over a 12–36 month horizon the status quo is likely to persist in many jurisdictions: waiver processes will continue to be used selectively, domestic capacity will incrementally expand, and some projects will inevitably delay or re-scope. The speed of adjustment will depend on three observable levers: (1) clarity and harmonization of agency guidance, (2) availability of near-term waiver relief for low-dollar commodity items, and (3) actual capital investment into U.S. manufacturing for the affected product classes. Monitoring each lever provides a practical roadmap for anticipating outcomes.

From a macro perspective, if policy uncertainty remains high and procurement friction persists, the net effect will be slower delivery of subsidized housing units and higher per-unit subsidy costs in the short run. That would exacerbate the existing deficit — which NLIHC estimated at roughly 7.3 million units for the lowest-income renters in its last published dataset (NLIHC, 2024) — and raise questions about the efficacy of federal housing allocations when implementation is the binding constraint. Conversely, a clarified and expedited waiver process would materially reduce near-term delivery risk while buying time for domestic capacity to scale.

Practically, institutions should build scenario playbooks: tracking agency waiver statistics, re-evaluating underwriting assumptions for carry costs, and engaging with suppliers to secure conditional commitments. Program sponsors may also consider product-standard harmonization and pooled procurement across projects to create scale that incentivizes domestic suppliers to invest. For deeper reading on procurement and infrastructure risk, see related work on topic and our framework for monitoring regulatory implementation topic.

Fazen Capital Perspective

The prevailing narrative frames the situation as a binary trade-off between domestic policy objectives and delivery speed; we view it as a multi-stage optimization problem that can be actively managed. Our counter-intuitive reading is that short-term waiver liberalization combined with conditional, performance-tied manufacturing incentives produces superior policy outcomes versus strict immediate enforcement. In practice, that means agencies should prioritize waivers for low-dollar, high-frequency items while simultaneously contracting for forward-looking purchase commitments with domestic suppliers that receive staged support tied to delivery milestones.

A constructive policy blend would reduce immediate program disruption without forgoing long-run domestic benefits. For institutional actors, the actionable implication is to underwrite projects for a world in which a subset (not all) of line items will face sourcing friction and to price that into contingency reserves rather than assuming blanket waivers or instant domestic supply. This approach preserves pipeline momentum and creates realistic demand signals for manufacturers — a necessary condition for them to invest.

Finally, we recommend that large capital providers and foundations convene pooled procurement vehicles for affordable housing fixtures. Such aggregation lowers transaction costs for suppliers and increases the predictability of orders, thereby shortening the horizon for domestic capacity expansion. These solutions are implementable within existing statutory frameworks and would materially lower the systemic execution risk identified by Fortune on Mar 27, 2026 (Fortune, Mar 27, 2026).

Bottom Line

Buy America implementation is a near-term execution risk for affordable housing delivery; operational fixes and measured policy reprioritization can materially reduce project failures and preserve long-term industrial benefits. Institutional stakeholders should track waiver metrics, adjust underwriting assumptions, and explore pooled procurement to mitigate the most acute frictions.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.

FAQ

Q: How long might waiver backlogs take to clear and what metric should investors monitor?

A: Clearance time depends on agency capacity and the nature of the requested waiver; monitor published agency waiver logs, Federal Register notices, and time-to-decision metrics where available. Short-term monitoring should focus on the Department of Housing and Urban Development and any program-specific waiver portals, plus publication dates for interagency guidance.

Q: Have similar domestic-preference rules caused delivery problems historically?

A: Yes. Historical comparisons include Buy American implementations in the 1980s and localized preference programs that temporarily disrupted procurement until domestic suppliers scaled — the lesson is that short-term disruption is common but can be managed with conditional support and coordinated purchasing.

Q: What practical steps can project sponsors take now?

A: Sponsors can (1) build contingency carry-cost buffers, (2) pre-qualify alternate domestic suppliers, and (3) consider pooled procurement agreements to provide demand visibility to manufacturers; these steps reduce the likelihood that a single sourcing hiccup stops a project.