The new law, published Thursday in Cuba's state-run newspaper, is a major change for the socialist country, The New York Times reported.
Buyers and sellers will be allowed to set home prices and certain transactions will no longer need government approval.
Some experts say the free trade of property could boost the island's economy, but critics contend the new law could exacerbate class conflict. They say the country's housing shortage means some people could face homelessness, the newspaper said.
Owners will be limited to two homes and financing must go through Cuba's Central Bank.