Creates new GS 160D-707, which requires local governments to permit the construction of small housing on lots zoned residential or mixed-use. Defines small housing as detached single-family dwellings that are 800 sq. ft. or smaller and are built to the standards of the North Carolina Residential Code for One- and Two-Family Dwellings that are on a foundation and connected to utilities, but excludes RVs and manufactured homes that are not affixed to real property. Creates exceptions for local historic districts and private covenants between landowners. Requires local governments to permit the connection of small housing to existing water and sewer systems without additional fees, meters, or approvals for connection.