President Donald Trump’s refusal to sign the 21st Century Road to Housing Act, which proponents argued would help with the nation’s lingering housing affordability crisis, surprised a lot of people. Like a solar eclipse or a blue lobster, the bill represented a rare instance where many prominent GOP lawmakers strongly supported a bill with unanimous Democrat support, a red flag for conservatives and those wary of industry capture, but a sign of bipartisanship for others.

As stunning as this development was, it could provide a useful opportunity for reflection. While Congress deserves credit for attempting to tackle the issue of housing, the bill largely misses the mark because it fails to tackle the key structural distortions that make housing unaffordable.

Let’s start with the good. The legislation contains some provisions that point in the right direction, including several housing policy recommendations from The Heritage Foundation’s recent key paper on strengthening American families. This includes streamlining onerous environmental review requirements for Housing and Urban Development-assisted housing activities, as well as expanding and reclassifying activities into exempt or categorical exclusion categories to shorten review timelines and reduce red tape.

>>> Making Housing Work for Americans

Likewise, the House and Senate versions of the bill eliminate the outdated federal “permanent chassis” definition of manufactured housing, an overdue change that could expand high-quality, lower-cost housing options. And the House’s “Helping More Families Save Act” creates an escrow-style pilot that lets HUD-assisted households retain gains from higher earnings—an approach that can incentivize self-sufficiency rather than punishing work.

But these positives are unfortunately outweighed by broader design flaws.

First, the bills drift into demand-side subsidy politics that predictably raise prices. The Federal Housing Administration Small-Dollar Mortgages pilot explicitly authorizes direct federal grants to borrowers for down payments, closing costs, appraisals, title insurance, and even direct payments to lenders to encourage more mortgages.

These actions may sound benevolent, but they would only boost housing demand in a supply-constrained market, which would increase house prices rather than provide relief. If you subsidize purchasing power for a good such as housing whose supply is inelastic, you don’t create affordability—you only bid up prices.

Second, the bills keep pouring money into supply-side subsidy programs with unproven track records. Reauthorizing and expanding the HOME program, which purports to pay builders to build more housing, and creating new spending on supply-side subsidies won’t guarantee more units—it often instead produces crowding-out (unsubsidized builders exit markets where government-subsidized competitors dominate) and deadweight loss (government funding for projects that would have already happened anyway).

Most telling is what’s missing from the legislation. There’s no serious effort to reform perhaps the largest driver of artificial housing demand: our government-run mortgage system. Nearly 80% of all mortgages are government-backed, a unique American phenomenon unseen in even the most socialist countries.

And just like government backing of student loans makes college more expensive, government backing of housing loans makes housing more expensive. Contrary to popular claims, our government-run mortgage market has not been shown to increase homeownership or home affordability—rather, it primarily increases prices by expanding credit availability faster than supply could possibly keep up.

More dollars chasing the same scarce resource means higher prices. Policymakers who claim to be against socialism and government-run markets are curiously silent on this issue.

>>> Washington Can Do More To Help State’s Families Afford Housing

Second, the bill fails to deal with immigration, the largest driver of housing demand and prices in many parts of the country. The government guarantees up to 250,000 new mortgages per year for non-citizens, with a total of up to 3 million such mortgages outstanding. With numbers this high, limiting government mortgage backing solely to US citizens would be a significant step in relieving demand and improving affordability.

Congress deserves credit for some key policy wins in this legislation. But if lawmakers want to truly make a difference, they should reject the temptation for easy solutions that please interest groups, such as attempting to micromanage local zoning decisions or creating new spending and programs that have never been proven to help affordability.

Policymakers should instead have the courage to address the real drivers of high housing costs, especially including artificial housing demand created by our government-run mortgage market, and created by the effects of reckless, large-scale illegal immigration.

Housing affordability will not come from adding more money and more programs, but from removing government distortions that cause the problem in the first place.

With a new opportunity created by Congress’s failure to pass the SAVE America Act, Trump has the power to send the bill back to the drawing board and accomplish just that.