The intention behind the Build America, Buy America (BABA) Act is noble. We all want more jobs at home and a supply chain that isn't tethered to the whims of overseas manufacturing. But in the middle of a brutal national housing crisis, the reality on the ground is getting messy. Developers are hitting a wall where federal mandates meet a supply chain that simply isn't ready to deliver.
If you're building affordable housing with even a dime of federal assistance, you're now caught in a regulatory vice. It's not just about the big steel beams anymore. It's the small stuff. Lighting fixtures, HVAC units, and even the hooks under your kitchen sink. If it's going into a federally funded project, it has to be "Made in the USA." The problem? For a lot of these items, a domestic version either doesn't exist at scale or costs so much it blows the project's budget out of the water.
The manufactured product bottleneck
Construction isn't just about raw lumber and concrete. It’s an assembly of thousands of manufactured products. Under the current rules, specifically those kicking into high gear in 2026, the requirements for these products are getting significantly stricter. By October 1, 2026, federally funded projects must ensure that manufactured products contain at least 55% domestic content by cost.
This sounds fine in a press release. It's a nightmare in a procurement office.
Most modern HVAC systems are global citizens. They have compressors from one country, sensors from another, and casings from a third. Forcing a developer to source a 100% compliant unit when the domestic market hasn't caught up leads to one of two things: massive price hikes or indefinite delays. I've seen projects where builders are waiting months just to get a "Buy America" compliant electrical panel that used to take two weeks to ship.
The waiver trap
There is a safety valve built into the BABA Act—the waiver process. You can apply for an exemption if a product is unavailable in the U.S., too expensive, or if the requirement is "inconsistent with the public interest." But don't expect a quick fix.
The waiver process is where projects go to die.
I’ve looked at cases where developers have had to wait over a year for a single waiver to clear. The Department of Housing and Urban Development (HUD) and the Made in America Office (MIAO) are the gatekeepers here. They're backlogged. They're understaffed. And they're cautious. If a waiver gets denied or stuck in "public comment" limbo, your construction site sits empty. Meanwhile, the interest on your loans is ticking away, adding hundreds of thousands of dollars to the final bill.
- Availability: Proving no one in America makes the product is surprisingly hard. You have to show you've canvassed dozens of vendors.
- Cost: To get a waiver for "unreasonable cost," the domestic product has to increase the total project cost by more than 25%. That’s a massive hurdle that ignores the smaller 5% and 10% hikes that still crush a project's viability.
- Timing: The clock never stops. While you're waiting for a federal agency to approve a $500 lighting fixture, your entire 200-unit affordable housing project is on hold.
Real families stuck in the crosshairs
This isn't just about developers and their balance sheets. It's about people who are priced out of every market they’ve ever lived in. Take a look at what’s happening in North Dakota and Maine.
In Fargo, residents like Diana Lene are waiting years for an affordable unit. She's 76 and surviving on Social Security. Every month that a "Buy America" regulation delays a new building is another month she’s scraping pennies to keep a roof over her head. This is the human cost of a policy that prioritizes long-term manufacturing goals over the immediate, desperate need for housing supply.
Westbrook Development Corporation in Maine is already saying what we’re all thinking: they're just going to build fewer units. If the compliance burden is too high, it's easier and safer to scale back. That’s exactly the opposite of what we need during a housing crisis.
Getting compliance right without the delays
If you’re a developer or contractor, you can't just cross your fingers and hope for a waiver. You have to be aggressive.
First, get your procurement teams on the phone with suppliers before you even break ground. You need written certifications that products meet the 55% domestic content threshold. Don't take a salesperson's word for it. Demand documentation.
Second, factor the "BABA premium" into your early-stage budgets. If you're relying on a project being "low cost" because you’re importing fixtures, you’re setting yourself up for a federal audit and a funding clawback.
Third, lean on your industry associations like the Associated General Contractors of America (AGC) or the National Council of State Housing Agencies (NCSHA). They have the resources to help you navigate the ever-shifting HUD guidance. They’re also the ones pushing for better general applicability waivers that could exempt smaller housing projects from these rules entirely.
The US housing crisis is a fire. Right now, the Build America, Buy America Act is acting more like a fire retardant for the construction industry than a catalyst for domestic growth. Until the waiver process is streamlined and the domestic supply chain for manufactured goods catches up, we're going to keep seeing those construction delays.
If you're managing a project today, go back and audit your materials list against the October 2026 55% threshold requirements now. Don't wait until the federal auditor is at your door to realize your HVAC system is 40% foreign-sourced. You should verify every single manufactured product on your spec sheet against the current BABA standards before your next funding milestone.
