HUD Announces $4 Billion Funding Shift for Homelessness Services, Prioritizing Treatment Over Housing First Model

HUD announced a $4 billion funding opportunity for homelessness services, shifting away from the Housing First model. The notice of funding opportunity, or NOFO, for HUD’s Continuum of Care program represents a major turning point in federal funding for homelessness services. The overhaul prioritizes funding for services focused on treatment and recovery over broad renewals of Tier 1 projects, such as permanent housing.

The courts blocked a NOFO last year that would’ve dropped the funding cap for Tier 1 renewal projects from about 90% to 30% midway through the existing grant cycle. The new NOFO includes a 60% cap on those projects, offering CoCs a compromise, while also directing funds toward transitional housing.

HUD Secretary Scott Turner wrote in a press release that the “housing first” experiment failed Americans by warehousing the vulnerable without results. Housing First prioritizes taxpayer-subsidized permanent housing for homeless individuals without any preconditions such as sobriety, participation in addiction treatment or employment. Supporters argue it’s supposed to be paired with support services, such as treatment, but participation is voluntary.

Critics say Housing First results in a revolving door, subsidized by everyday citizens with their taxes. Dr. Sam Tsemberis developed Housing First in the 1990s, and HUD has used the model for 15 years. Turner wrote that this ideology promised to end homelessness, but instead, billions of taxpayer dollars were spent while homelessness increased to record levels, referencing federal data from January 2024.

Recent data shows a 3.4% decline in estimated homelessness nationwide from 2024 to 2025, but HUD’s annual point-in-time count in January 2025 still represents about a 27% increase from 2013. Taxpayer-subsidized beds also increased 151% from 2013 to 2025, according to HUD’s press release.

In an interview last year, Tsemberis said the fentanyl crisis facing the nation today is different than the crack epidemic in the 1990s; however, he told The Center Square that the solution for homelessness is housing and argued that abandoning Housing First will result in more people ending up on the streets.

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