High Costs, Little Inventory: Tackling the Housing Crisis

High Costs, Little Inventory: Tackling the Housing Crisis

Forecast '26: Lawmakers will also continue their work to make child care more affordable and to navigate the evolving SNAP landscape.

A Minneapolis-bound train, left, passes a St. Paul-bound train on the University of Minnesota campus. To expand workforce housing, some lawmakers aim to encourage transit-oriented development-compact, mixed-use neighborhoods near public transportation. (Runner1928/ Wikimedia Commons)

From housing shortages and rising costs to the child care crisis and sweeping changes in nutrition assistance, states are facing a perfect storm of challenges in 2026.

Read on to learn why these issues will dominate state agendas in the year ahead, how states are responding and what's on the horizon.

Forecast '26 is a special report from State Legislatures News covering the topics NCSL's policy experts anticipate will occupy state lawmakers' time in 2026 legislative sessions. Read the full report.

Hot Topic: Reducing Housing Costs, Increasing Economic Security

In 2025, legislators in all 50 states, Washington D.C., Guam, Puerto Rico and the U.S. Virgin Islands introduced more than 3,300 bills addressing housing and homelessness-the most ever recorded by NCSL. Despite all the legislative activity, states are just beginning to enact strategies to address the nation's housing crisis. With the need so great and the economic impact so vast, NCSL predicts housing policy will remain a high priority for state legislatures in 2026.

Just how big is the crisis? The nationwide shortage of rental and owner-occupied housing is estimated to be at least 1.5 million units, according to the National Association of Home Builders, and as many as 5.5 million, according to the National Association of Realtors.

The National Low Income Housing Coalition estimates the shortage of affordable and available rental homes for people with extremely low incomes could be as high as 7.1 million. HUD defines "extremely low income" as households with incomes at or below the federal poverty guideline or 30% of area median income, whichever is greater. The U.S. Census Bureau reports that nearly half of renter households are cost-burdened, defined as spending more than 30% of household income on rent, mortgage or other housing costs. As costs for food, transportation and child care also continue to rise, many households are struggling to stay sheltered and make ends meet.

Recent state policy trends may be a bellwether of what is to come. High on the list are promoting construction of workforce housing, incentivizing transit-oriented development, strengthening eviction protections, expanding first-time homeownership opportunities, limiting investor purchases of residential properties and regulating short-term rentals.

NCSL Resources:

• Housing and Homelessness Toolkit
• Housing and Homelessness Legislation Database
• Economic Security and Mobility Toolkit
• Economic Mobility Legislation Database

Hot Topic: Child Care Conundrum

The nation's fragmented child care system is struggling with a basic supply and demand problem: The demand for child care is greatly outpacing supply, leaving 4 million children without access to care, according to the University of Nebraska's Buffett Early Childhood Institute. For families who can find child care, the average cost has increased 29% since 2020, outpacing inflation. The Economic Policy Institute reports that infant care, which is even harder to find, costs more than in-state college tuition in 38 states.

Recognizing child care as an essential economic support for both families and communities, a growing number of states are exploring policies to expand availability while making child care more affordable for families. Montana and Connecticut have both created dedicated trust funds to support early childhood initiatives. Elsewhere, states are right-sizing regulations and by reducing barriers to opening and operating child care businesses and revising their licensing processes. Some states are addressing industry-wide workforce shortages by providing access to health insurance and child care benefits, which help child care businesses recruit and retain caregivers. Other states are encouraging private-sector employers to be part of the solution by offering tax credits and cost-sharing programs for businesses that provide or subsidize child care for their workforce.

Legislatures are taking many different approaches, but one thing is for certain: States will be wrestling with child care supply and affordability in the 2026 session and beyond. To support their work, NCSL has convened a bipartisan work group to develop child care policy guidance for legislatures. The work group's report will be released in 2026.

NCSL Resources:

• NCSL Early Childhood Legislative Database
• Federal Funding Streams for Child Care and Early Childhood Education
• Early Childhood Professionals Policy Toolkit

Trending: The New SNAP Landscape

The tax cut and domestic policy law signed by President Donald Trump in July introduced sweeping changes to the Supplemental Nutrition Assistance Program, with direct implications for state governments. Key provisions include new and expanded cost-sharing obligations, expanded work requirements, revised eligibility and benefit calculations, and limits on temporary state exemptions in areas without sufficient jobs.

For legislators, this marks a significant shift in fiscal and administrative responsibility. Beginning in federal fiscal year 2027, states will be obligated to cover 75% of administrative costs-up from 50%. In federal fiscal year 2028, states for the first time will be required to contribute to SNAP benefit costs if their payment error rates exceed 6%. These changes will require updates to eligibility systems, expanded staff training and robust outreach to participants. States may face budgetary strain, workforce challenges and increased risk of benefit loss for individuals unable to meet new requirements.

Other pressures further complicate implementation. The president's domestic policy law also introduced major Medicaid changes, including mandatory work requirements for adults in expansion states, more frequent eligibility checks, and limits on provider taxes used to fund state Medicaid costs. The combined impact of the Medicaid and SNAP provisions may tax agency capacity to implement the new requirements-particularly in states that rely on a shared eligibility workforce for Medicaid and SNAP. Additionally, the implementation costs of the new SNAP and Medicaid provisions, combined with decisions around which benefits, if any, states may choose to backfill, will be an added pressure on state budgets, all of which except Vermont's must be balanced according to statutory or constitutional requirements.

States are in the early stages of assessing the impact of these changes. Legislative responses may include investments in technology and data integration, staff training to reduce error rates, expansion of workforce programs, and reevaluation of program administration. Some states may also be weighing the feasibility of continuing to operate SNAP under federal rules that prohibit states from paying partial benefit payments.

As SNAP requirements evolve, legislators must navigate a complex policy landscape, balancing compliance, access and fiscal sustainability in 2026 and beyond.

Additional Resources:

• Supplemental Nutrition Assistance Program (SNAP) and Related Nutrition Programs in P.L. 119-21: An Overview (USDA)
• How the Federal Reconciliation Bill Will Affect Farms and Food Policy (State Legislatures News)
• How SNAP and Medicaid Changes Will Impact State Education Budgets (State Legislatures News)
• SNAP SMARTS: Reducing Error Rates and Understanding Federal Changes (NCSL webinar, first of two parts)
• Feeding Growth: The Economic Impact of SNAP on States and Rural Communities (NCSL webinar, second of two parts)
• Supplemental Nutrition Assistance Program (NCSL report)
• Tracking the 2025 Budget Reconciliation Process (NCSL resource)
• One Big Beautiful Bill Act: Nutrition Provisions Affecting States (Federal Funds Information for States)
• Shifting the Burden: How the Recently Passed Budget Reconciliation Package Reshapes SNAP and Strains State Budgets (Food Research and Action Center)