Utah Lawmakers Target Starter Homes With Lot Size Reform

Utah lawmakers opened their 2026 legislative agenda with a proposal to revive a once-bedrock fixture of the American Dream of homeownership: starter homes. By streamlining permit approvals and rezoning for smaller property lots, Beehive State legislators will try to pry open a path to first-time homeownership.

The bill would reduce minimum lot sizes to encourage the construction of starter homes and improve problematic statewide housing affordability. The new measure comes a year after Utah Gov. Spencer Cox set a goal of building 35,000 starter homes by the end of 2028, and builds on a series of housing reforms signed into law last year.

“We desperately need more entry points into ownership, not just more units on a spreadsheet,” said Patrick Risk, a Salt Lake City residential land broker with Northmarq, in an interview with The Builder’s Daily.

If efforts in other states on starter homes are any indicator of the odds of success, a Utah bill faces a challenging road ahead. Across the country, state legislatures have tried “starter home” or minimum-lot-size reforms, to little avail.

Texas and Maine are the only two states that have lowered minimum lot sizes as a basis to encourage smaller – perhaps starter – home development. Maine went to 5,000 square feet while Texas lawmakers settled on 3,000 square feet. The Lone Star State sponsors originally sought 1,400 square feet, in line with what Houston has had in place for decades.

Non-starter state efforts

Arizona’s recent history in this area stands out for how futile such efforts can be. The Arizona Starter Homes Act has failed for two consecutive years. Gov. Katie Hobbs vetoed the bill in 2024, and the effort stalled last year amid opposition from the League of Arizona Cities and Towns. Such organizations tend to oppose housing reform, particularly when it entails preemption of local zoning authority. The Arizona bill sought to abolish local minimum lot-size rules in new subdivisions and to require larger cities to permit lots as small as 1,500 to 3,000 square feet.

For Utah lawmakers, the meager track record of success shows that starter-home bills invite intense city backlash and transform relatively innocuous zoning tweaks into bruising housing fracases.

State population surge meets housing affordability challenge

Utah’s job and population growth have been strong since 2010, making it one of the fastest-growing states in the country. University of Utah’s Gardner Policy Institute estimated in November that the state is on pace to add 2 million more people over the next four decades.

With that growth, however, housing affordability has become problematic.

“Housing affordability continued to challenge new buyers as Utah’s homeownership rate declined to the lowest level in decades,” the Institute noted in its annual economic report to the governor. The Institute identified high housing costs as a potential economic risk. The report noted that Utah’s housing market showed modest growth, with home prices rising just 2%. That increase was slower than both inflation and income gains.

Yet affordability remains a major hurdle for new buyers, and the state’s homeownership rate has reached its lowest level in decades. The report ranked Utah 30th nationally on homeownership.

Finding solutions for housing affordability

Utah state officials estimated during a recent strategic planning process that the state needs 274,000 new housing units by 2033 to meet demand. That estimate underscores the scale of the challenge. Governor Cox’s goal is 150,000 units by the end of 2028, including 35,000 starter homes.

That’s where House Bill 184, dubbed Local Land Use Revisions, enters the mix. It would allow homes on smaller lots than the current zoning permits in Utah cities. Builders would request permission to build on smaller lots. The bill would give local governments 30 days to respond to those requests, or they would be automatically approved.

Utah lawmakers made housing a top priority in 2025. They passed a bill that strengthened moderate-income housing rules. HB 37 allows cities and counties to permit higher-density single-family development in exchange for affordability and ownership guarantees. It gives local governments flexibility to approve compact neighborhood designs that promote homeownership and expand housing choices across income levels.

Developers can earn density bonuses by meeting specific affordability and size requirements tied to long-term community investment. Those requirements include allowing deed restrictions to require at least 60% of units to be owner-occupied for five years. Another requirement is that 25% of units be affordable to households earning up to 120% of the county’s median income. Or, at least 25% of units must be smaller than 1,600 square feet.

Supporters said the bill balances growth and affordability by encouraging mixed-income, owner-occupied neighborhoods without altering existing community character. The law connects all this to earlier first-home and infill tools. It encourages new homes near transit lines, job centers and shopping areas. Lawmakers said the goal is more homes in smart locations, not endless sprawl.

Other 2025 bills played smaller roles. One bill tweaked rules for “home ownership promotion zones” and how they spend revenue. Another bill adjusted land-use and development procedures that shape how projects move forward.

Reducing friction to building more homes

Utah’s approach to housing reform aligns with similar efforts in neighboring states and across the country. Colorado, for example, passed a slew of laws to speed up housing construction and allow more housing types to improve affordability.

“The focus on lot size flexibility and starter-home definitions is directionally right,” land broker Patrick Risk said. His concern is whether the bill achieves the goal of increasing the number of starter homes or shifts decision-making without addressing the full costs of building. Land, impact fees, financing and infrastructure still matter. “If those don’t move in parallel, we risk passing a bill that sounds bold but doesn’t meaningfully change outcomes on the ground,” he said.