HUD Rejects Failed “Housing First” Strategy

The Department of Housing and Urban Development announced on June 1 that the federal government’s principal homelessness program would undergo the most significant overhaul in decades. Published in the annual Notice of Funding Opportunity (NOFO) for the Continuum of Care program (CoC), HUD’s new standards and criteria make clear the Trump administration’s position that homelessness is less of a housing problem than a complex entanglement of addiction, mental illness, crime, and social instability.

For the last 20 years, homelessness advocates have repeated the refrain “housing solves homelessness” as communities have invested tens of billions of dollars in subsidized housing. Meantime, a swelling unsheltered homeless population has wrought havoc on city streets. Across both Republican and Democratic administrations, HUD listened to these advocates and dedicated nearly all its homelessness funding to providing unconditional, subsidized housing to homeless people. As many researchers and public officials have long pointed out, this “Housing First” strategy has failed adequately to address America’s homeless crisis.

But even as state and local officials saw the failure of the federal homelessness strategy, they were largely powerless to change it and adopt the new approaches being taken in their communities. In Utah, then-Rep. Tyler Clancy sponsored a concurrent resolution in 2025 calling upon HUD to give states more discretion over how they respond to homelessness with federal funds. HUD’s new NOFO answers precisely that call from state leaders nationwide.

Researchers and experts within HUD itself revealed their own concerns with the federal Housing First strategy in a section of the NOFO that provides detailed data on the lackluster outcomes of their grantees. HUD officials warned that current programs have failed to support people with mental illness or addiction, leading to staggering mortality rates among formerly homeless clients. Moreover, these programs failed in their statutory duty to promote self-sufficiency—in most such programs, twice as many clients exit due to death as exit by moving into unsubsidized housing.

Now, HUD is requiring grant recipients to diversify their programs, promote self-sufficiency, integrate behavioral-health treatment, and collaborate with law enforcement to ensure basic safety for clients and communities. The more than 430 Continuums of Care that cover every region of the country must get their houses in order. If they fail to do so, HUD has warned in the NOFO, it may deny funding to CoCs that have received credible complaints of malfeasance, that have histories of poor performance, that show improper governance, or that have recklessly administered funds and programs. Gone are the days of HUD automatically renewing 93 percent of homelessness grants.

Predictably, homelessness activists have dug in their heels. Several nonprofits are looking to federal courts to block HUD’s latest changes, pursuing a litigation strategy that previously worked against the Trump administration. But even if the new changes hold, advocates are sharing ways to undermine HUD’s directives. The National Alliance to End Homelessness is training providers to manipulate definitions and terminology in an attempt to upend and work around the new federal requirements. According to leaked webinars and confidential sources, dozens of CoCs are telling their members in writing, in teleconferences, and by word of mouth to ignore HUD’s reforms and stick to the past approaches. Instead of focusing on new approaches to save lives and improve communities, they are spending time and resources fighting for their failed ideology.

These efforts distract CoCs from the necessary work of improving their programs to align better not only with HUD but also with their state and local leaders who have been crying out for reform. Moreover, HUD has broad discretion and tremendous leverage to ensure its programs are properly administered. Eleven days after publishing the new NOFO, the department announced the suspension of funding to the Los Angeles Homelessness Services Authority due to its inability to demonstrate competence and accountability. Cutting off funding for the largest- and highest-funded region of the country should demonstrate HUD’s resolve. Failing to comply with HUD’s new direction will likely result in reduced awards for ideologically driven organizations.

CoCs should assure taxpayers that they are working in concert with HUD and national sentiment to reduce the number of people living (and dying) on the street. They should support—not resist—calls for transparency from governments and the public. And they should retool their efforts to produce outcomes that move the homeless toward sobriety, treatment, self-sufficiency, and safer communities.

After decades of spending, homelessness remains near an all-time high. The results have been death, destitution, and destruction. Change must come to save and transform lives and reclaim our cities and neighborhoods. The federal government is now bolding leading the way. Homeless service providers should respond by proving that they are faithful and effective stewards of taxpayer funds. If they don’t step up, HUD may simply look elsewhere for grantees.