The U.S. Department of Housing and Urban Development (HUD) is preparing major changes to its homelessness funding programs that could shift billions of dollars toward transitional housing, treatment services and workforce-focused programs, creating new opportunities for housing developers, service providers and contractors.
The agency said the proposed changes are intended to address underlying causes of homelessness, including substance abuse, mental illness and unemployment, while placing greater emphasis on treatment, recovery and self-sufficiency programs.
HUD officials said the agency plans to move away from long-standing “housing first” policies as part of a broader overhaul of federal homelessness programs. Officials said the changes are aimed at addressing rising homelessness rates while increasing accountability in federally funded programs.
The changes are expected to reshape future funding competitions under HUD’s Continuum of Care program, which provides grants to local governments, nonprofits and regional Continuums of Care for housing projects and homelessness assistance programs. Eligible activities can include property acquisition, rehabilitation, leasing, supportive services and housing operations.
HUD said its fiscal 2026 Continuum of Care Notice of Funding Opportunity is expected by June 1, with awards targeted for distribution by Dec. 1, giving applicants a relatively short timeline to prepare proposals and partnerships.
The agency has signaled that future funding priorities could place greater emphasis on transitional housing, substance abuse treatment, mental health services, job training and self-sufficiency programs instead of permanent supportive housing models that have received priority in federal homelessness funding in recent years.
Photo by D Goug from Pexels
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