Recent changes in the federal Continuum of Care (CoC) funding notice puts more than 170,000 households at risk of losing stable housing, according to CSH, an organization that promotes affordable housing with supportive services.
The impact extends beyond the residents. Developers and investors who layered CoC funding with low-income housing tax credits and other capital now face financial instability and compliance risks, says the organization, noting that thousands of private-market leases supported by CoC rental assistance would be terminated, reducing landlord income at a time of rising costs.
“Over the past several weeks, my team and I have spoken with housing and service providers, community leaders, business leaders, and members of Congress from both parties, and we’re hearing strong concern about the impact of the Department of Husing and Urban Development’s (HUD’s) changes nationwide,” said Deborah De Santis, president and CEO of CSH. “The concern centers on the speed and scale of the changes and the reality that most communities lack the infrastructure to manage members of 170,000 households returning to homelessness.”
Earlier in November, HUD announced a change to the funding notice for the CoC program, the main federal funding source to assist people experiencing homelessness.
The move would move millions of dollars away from permanent supportive housing (PSH) to transitional housing and temporary services.
Going into 2026, nearly 90% of CoC funding was expected to be used for PSH units connected to services needed for housing stability, but the new requirements instead limit the amount of CoC funds that can be used for PSH to 30%, reported Leading Age, an organization that represents more than 5,400 nonprofit aging services providers and others serving older adults.
“By decreasing the cap of Continuum of Care funds that can be used at the local level for permanent supportive housing from 90% to 30%, HUD’s new funding competition will dramatically and negatively impact the ability of PSH programs to continue their notable success in preventing and ending homelessness,” said Katie Smith Sloan, president and CEO of Leading Age. “Cutting support for PSH will harm Americans, including older adults, who are currently served through PSH but will now face homelessness because of the country’s severe lack of affordable housing.”
The National Homelessness Law Center added that the funding guidelines will “restrict funding from cities that refuse to treat homelessness as a crime, impose ideological mandates on states to attack trans people and immigrants, and deny funding to jurisdictions that recognize the common sense and data-backed truth that housing and support solve homelessness.”
The National Low Income Housing Coalition (NLIHC) was quick to raise concerns about the administration’s actions.
“The administration’s changes would cut CoC funding for permanent supportive housing programs, such as Housing First, by more than half and redirect funds to transitional housing, including programs with additional barriers such as work and service requirements,” said Renee M. Willis, NLIHC president and CEO. “This shift could put approximately 170,000 formerly homeless people, including families with children, people with disabilities, veterans, and older adults, at risk of returning to homelessness.”