Community Development and Housing This Week: Budget Battles, Voucher Cuts, and a Bipartisan Bill in Limbo

Key Takeaways

1. Trump's proposed FY2026 budget would slash HUD funding by roughly 44 percent — about $33.6 billion — eliminating cornerstone federal housing programs including CDBG and HOME. Congressional appropriators are now deciding what survives.

2. Section 8 rental assistance faces a funding shortfall under both House and Senate Republican spending proposals, with estimates that hundreds of thousands of current voucher recipients could lose aid.

3. The ROAD to Housing Act, a sweeping bipartisan housing reform bill, cleared the Senate Banking Committee unanimously last year but has stalled — and was stripped from the National Defense Authorization Act, leaving its path forward uncertain.

The HUD Budget Ax: A 44 Percent Cut That Would Reshape Federal Housing Programs

The single largest force shaping community development housing policy on Capitol Hill right now is the administration's proposed FY2026 budget. President Trump's spending plan calls for a $33.6 billion reduction to the Department of Housing and Urban Development — a cut of approximately 44 percent — that would eliminate two of the most established pillars of affordable housing policy: the Community Development Block Grant program and the HOME Investment Partnerships Program.

The CDBG program, which has distributed flexible funding to state and local governments for decades, is currently funded at roughly $3.3 billion annually. HOME, which supports affordable housing construction and rehabilitation, would also be zeroed out. The budget further proposes restructuring federal rental assistance into a state-administered block grant, a move the Corporation for Supportive Housing warned would cut voucher funding by $26.7 billion.

The Urban Institute noted that the proposed budget would effectively cut housing funds in half, with outsized impacts on high-cost metro areas already facing severe affordability crises.

Who's Fighting Back

A bipartisan group of House members, led by Rep. Julia Brownley (D-CA), sent a letter to House Appropriations leadership urging continued CDBG funding at current levels. The U.S. Conference of Mayors also publicly urged protection of the program ahead of the House THUD Appropriations Subcommittee markup.

On the Republican side, Rep. Monica De La Cruz (R-TX-15) highlighted the importance of HUD grant programs in her district just this week, thanking HUD Assistant Secretary for Community Planning and Development Ronnie Kurtz "for sharing important insight on available grant programs to expand affordable housing and foster community development across TX-15."

That statement underscores a tension within the majority: even members of the president's own party rely on the very federal housing programs the budget proposes to eliminate.

Industry Response

The proposed cuts have mobilized a broad coalition of affected organizations. The National Association of Home Builders (NAHB) has been vocal about the downstream effects on housing supply. The National Low Income Housing Coalition (NLIHC), one of the leading voices on affordable housing policy for the lowest-income Americans, has organized opposition alongside groups like Enterprise Community Partners and Habitat for Humanity.

Meanwhile, the National Association of Realtors (NAR) — consistently one of the top lobbying spenders in Washington — and the Mortgage Bankers Association (MBA) are closely tracking the appropriations process, given the ripple effects that deep HUD cuts would have on housing markets and mortgage demand.

No new community development housing legislation was introduced this week to directly counter the proposed cuts, and no hearings were held. That silence itself is notable — the appropriations fight is playing out behind closed doors in committee markups rather than in public forums.

Section 8 Vouchers: Hundreds of Thousands Could Lose Assistance

Separate from the broader HUD budget question, Section 8 rental assistance — the federal government's largest program for helping low-income renters afford housing — faces its own funding crisis in the current spending proposals working through Congress.

According to reporting by Capital & Main, the House Republican spending bill could result in more than 400,000 fewer people receiving housing vouchers. The Senate version, while less severe, could still leave an estimated 250,000 people without assistance. More than 5 million Americans currently depend on Section 8.

The issue is not necessarily an outright elimination of the program — it is that neither chamber's proposal keeps pace with rising rents. As costs climb, flat or reduced funding means fewer vouchers can be issued and renewed.

The Policy Stakes

Public housing legislation and voucher funding have historically enjoyed bipartisan support, but the current fiscal environment has shifted the debate. The administration's proposal to convert rental assistance into a state block grant would fundamentally alter how the program operates, moving away from the individual entitlement model that has defined Section 8 since its creation.

Empower Missouri noted that key votes on federal housing funding are imminent, while HousingForward Virginia observed the contradiction in Congress's approach: "Congress gives with one hand, but readies to take with both."

Who's Affected

The Council of Large Public Housing Authorities (CLPHA) and the National Association of Housing and Redevelopment Officials (NAHRO) — which together represent the agencies that actually administer vouchers on the ground — are among the most directly affected stakeholders. The more than 3,000 local public housing authorities nationwide would face immediate operational challenges if funding falls short.

Homelessness initiatives would also feel the impact. Organizations like the National Alliance to End Homelessness have warned that voucher reductions would push more people into homelessness at a time when the administration has simultaneously proposed cutting dedicated homelessness funding.

Full-year HUD funding for FY2025 was signed into law earlier this year after months of continuing resolutions, providing $38.4 billion for Housing Choice Vouchers — an increase over FY2024. But that baseline is now the starting point for a much more contentious FY2026 negotiation.

The ROAD to Housing Act: Bipartisan but Stalled

The most ambitious piece of public housing legislation in the current Congress — the ROAD to Housing Act of 2025 (S. 2651) — passed the Senate Banking, Housing, and Urban Affairs Committee with a unanimous 24-0 vote last July and was placed on the Senate Legislative Calendar on August 1. Led by Sen. Tim Scott (R-SC), the bill addresses housing supply, affordability, homelessness initiatives, and regulatory streamlining across HUD, USDA, and VA programs.

The bill's provisions are broad: boosting housing construction near transit, reforming manufactured housing rules, modernizing HUD oversight, and expanding housing for veterans and people with disabilities. A Congressional Research Service report detailed the bill's scope, and the Bipartisan Policy Center published an explainer calling it one of the most comprehensive housing reform efforts in years.

Where It Stands

Despite the unanimous committee vote, the bill has not received a floor vote. An effort to attach it to the National Defense Authorization Act was rejected, removing what many saw as its most viable legislative vehicle.

As JD Supra reported, affordable housing reform efforts in Congress — including both the ROAD Act and the companion "Housing for the 21st Century" framework — remain in a holding pattern. The bill has broad stakeholder support from groups spanning the housing industry, including the National Multifamily Housing Council, which filed a Fourth Quarter 2024 lobbying disclosure on housing issues, and the American Land Title Association, which filed its own Fourth Quarter 2024 disclosure covering housing and consumer protection matters.

America's Credit Unions highlighted the bill's potential benefits for their members and the borrowers they serve, particularly provisions related to housing finance and manufactured housing.

The Outlook

The ROAD to Housing Act remains one of the few pieces of legislation in this Congress that has demonstrated genuine bipartisan support on housing. But without a clear floor schedule or a must-pass vehicle to attach to, its prospects are uncertain. The appropriations battle over HUD funding is consuming most of the oxygen in the housing policy space, and there is no indication that Senate leadership plans to bring the bill to a standalone vote in the near term.

No hearings on the ROAD Act or any other community development housing topic were held or scheduled this past week, reinforcing the sense that the action has shifted from policy development to the raw spending fights that will determine the future scale of federal housing programs.

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