With national housing affordability under control, Democratic Pennsylvania Gov. Josh Shapiro has proposed a $1 billion plan to build more housing throughout the state.
Shapiro’s Critical Infrastructure Fund — included in his broader $53.26 billion budget recommendation — would support housing and infrastructure projects and finance them with new bond proceeds.
“Instead of thinking about this, let’s go ahead and make a real impact,” Shapiro told lawmakers in his annual state of the nation address on Tuesday. “We need hundreds of thousands of new homes.”
In an hour-and-a-half speech introducing his 2026 state budget plan, Shapiro outlined the state’s comprehensive strategy for rezoning and home improvement. The measures will allow for mixed-use residential areas, encourage transit-oriented development and direct mixed-use development along highways and commercial corridors, paving the way for adding tens of thousands of new homes throughout Pennsylvania’s cities and towns.
Shapiro’s push for housing reform reflects a pattern of solutions being pursued by governors and legislators across political parties as they face the collapse of affordable housing for many Americans. Texas, Florida, Colorado, Washington and California have passed zoning reforms that prioritize local governments, often with bipartisan support.
Pennsylvania Republican lawmakers, however, signaled after Shapiro’s speech that they would push back on his proposed budget because of its size.
“The problem of affordability is real and people are struggling,” House Republican Whip Tim O’Neal said in a statement. “This proposal by Gov. Shapiro is irresponsible and will result in increased costs throughout the state.”
Housing shortage
Pennsylvania has its own housing crisis, a common plight across the United States. In his speech, Shapiro noted that more than half of the state’s housing is over 50 years old.
“If we don’t take action now, we will have a shortage of 185,000 homes in 2035,” he said.
Unlike the Sun Belt states, Pennsylvania — and other Rust Belt states — missed the boom in residential development in the pre- and post-pandemic era. Home prices in the state have soared as even lower levels of demand collide with a long-standing, structural housing shortage, especially for starter and mid-priced units, according to an analysis by the Pew Charitable Trusts last March.
The report notes:
“From 2017 to 2023, local governments issued building permits for only enough units to increase the state’s housing stock by 3.4% – less than the United States as a whole, which increased by 7.5% during that seven-year period. During that time, the number of homes in Pennsylvania increased by 5.1%, which is more than the number of units being released. Rents have increased significantly in Pennsylvania.”
The authors of the Pew analysis recommended that the state follow a zoning reform approach followed by other states, including allowing detached houses in single-family neighborhoods, reducing minimum parking spaces, and allowing mixed-use dwellings.
Cities have taken their own measures
Pittsburgh embraced zoning changes about five years ago to address its growing housing crisis. The city has created zoning districts that include areas in need of new development to reserve a portion of affordable units in hot market areas.
The Builders Association of Metropolitan Pittsburgh sued the city over the new rules, but neighborhood groups stepped up to support the city. A federal judge dismissed the case last year, ruling that the organization filed the lawsuit prematurely.
The builders could not show the damage yet because the local law is very new.
In 2025, the Pittsburgh City Council advanced a Housing Needs Assessment bill, which would have mandated ADUs citywide, eliminated parking and created a Voluntary Affordable Housing Bonus Program tied to purchases or local fees. The law is pending.
Philadelphia, across the state to the east, has taken modest steps toward its reach.
The City Council created an overlay for mixed-income areas, requiring housing projects with 10 or more units to set aside 20 percent as income-restricted housing. Developers can get more height and reduced parking requirements in exchange.
Separately, the citywide Mixed Income Housing Bonus gives developers more density, floor space, or height if they include affordable units or make payments in lieu.
Amending zoning codes across the county
Shapiro said there is no catalog of the various laws and regulations in the 2,560 municipalities.
“We need to build one, so we can help local governments understand what works best to build affordable housing,” he said. “That also means working with local communities to modernize the Municipal Planning Code to build where it makes sense – and cut red tape where it’s unnecessary.”
Politics will decide whether Gov. Is Shapiro successful in cutting red tape, as he has done in other states. Republicans have a slim edge in the State Senate, while Democrats have a one-seat majority in the House as of 2022. Divisions in the Legislature have delayed policy-making, particularly on housing.
Shapiro tried last year to revive the housing reform program so that residents can stay in it. The Whole House Repair Program began in 2022 as a one-time initiative funded by federal dollars under the American Rescue Plan. He was unable to get state funds through the Legislature for three years in a row.
