The More Homes on the Market Act: Explained

Overview: More Homes on the Market Act

The More Homes on the Market Act updates federal capital gains exclusion rules for the sale of a primary residence. In plain terms, it changes the home sale tax break so long-time owners face a smaller tax bill when they sell.

The bill is designed to reduce a tax burden that discourages some homeowners from listing their homes. When more owners choose to sell, more existing homes hit the market, which gives buyers more options and more chances to find a home that fits.

The More Homes on the Market Act was introduced on February 13, 2025, in the House of Representatives and referred to the House Committee on Ways and Means.

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What Is The More Homes on the Market Act?

The More Homes on the Market Act is a tax bill focused on home sellers. It updates the federal capital gains exclusion for a primary residence so homeowners can keep more of their profit when they sell.

This matters because taxes influence when people decide to move. When the after-tax cost of selling feels high, some owners stay put longer, even when their home no longer fits their needs. When selling becomes more tax-friendly, more homeowners choose to list, which increases the supply of homes for sale.

How The Home Sale Tax Break Works Today

When you sell a home for more than you paid, the difference is your profit. For taxes, that profit is often called a capital gain.

Under today’s federal rules, many homeowners do not pay federal capital gains tax on a large portion of their profit when they sell their primary residence:

• Up to $250,000 of profit excluded for individual filers
• Up to $500,000 of profit excluded for married couples filing jointly

To use the exclusion, the home must be your primary residence, and you generally must have owned and lived in the home for at least two years out of the last five years before the sale.

What The More Homes on the Market Act Changes

The More Homes on the Market Act updates the capital gains exclusion rules tied to selling a primary residence. The practical outcome is a lower tax burden for homeowners whose home values have grown significantly since they bought.

By reducing the tax friction tied to selling, the bill aims to increase the number of existing homes listed for sale. For buyers, that translates into more listings to tour, more neighborhoods to consider, and more chances to match your budget with the right home.

Example: How A Bigger Exclusion Affects A Seller’s Decision To List

Here’s a simplified example that shows why the exclusion matters.

A married couple buys a home for $300,000 and later sells it for $900,000.

• Sale price: $900,000
• Purchase price: $300,000
• Profit: $600,000

Under today’s $500,000 exclusion, $100,000 of profit is above the excluded amount and is generally taxable as a capital gain.

When the exclusion increases, more of that $600,000 profit stays sheltered from capital gains tax. The seller keeps more money after taxes, which makes selling and moving feel more achievable.

More sellers listing homes is the entire point of the More Homes on the Market Act, and it is the channel through which buyers benefit.

Who Benefits From The More Homes on the Market Act?

The More Homes on the Market Act is built to help homeowners selling a primary residence, especially homeowners who have stayed in their homes long enough for home prices to rise sharply.

Home buyers benefit indirectly. When long-time owners list their homes, buyers see more inventory of existing homes, including homes in established neighborhoods and homes that have been owner-occupied for many years.

Here’s how that shows up in real life:

• More existing homes listed for sale at the same time
• More choices between neighborhoods, layouts, and school zones
• More chances to buy without waiting months for the right home to appear

Even when you are a first-time home buyer, more listings help because you spend less time competing for the same small set of homes.

How The More Homes on the Market Act Works

The More Homes on the Market Act works by changing the tax math for selling a primary residence.

1. It targets the profit portion of a home sale

A home sale has multiple moving parts, but the tax issue centers on profit. The exclusion is the piece that shields a set dollar amount of profit from federal capital gains tax when you meet the primary residence rules.

When the exclusion is larger, fewer homeowners face taxes on their profit at sale, especially in markets where prices have risen for a long time.

2. It reduces “stay-put” pressure for long-time owners

Some owners want to move closer to family, downsize, or relocate for work, but the tax hit on a large gain pushes them to delay selling. The bill reduces that pressure by letting more profit stay excluded.

When more homeowners decide the timing works to sell, more homes enter the resale market.

3. It increases inventory through existing homes, not new construction

The bill’s impact is about resale inventory. It encourages homeowners to sell homes that already exist, which is the largest share of homes buyers shop from in many areas.

That is why the bill is often described as a housing inventory bill, even though it changes tax rules rather than funding construction.

This approach supports buyers by expanding choices in the listings you see today.

Who Sponsors The More Homes on the Market Act?

The More Homes on the Market Act is introduced in the House of Representatives and is currently before the House Committee on Ways and Means. For the latest legislative updates and cosponsors, see the Bill Tracker above.