During a recent hearing before the House Appropriations Subcommittee on Transportation, Housing and Urban Development, HUD Secretary Scott Turner shared his vision for reshaping the country’s housing approach under President Trump’s 2026 budget proposal.
A Shift in Strategy and Spending
Turner presented a bold proposal that calls for $33.2 billion in new budget authority for the Department of Housing and Urban Development (HUD) for Fiscal Year 2026. That figure represents a sharp reduction more than $35 billion compared to the previous fiscal year. HUD plans to offset some of its spending through revenues generated by the Federal Housing Administration (FHA) and Ginnie Mae.
“The average home price is now over $414,000, and the 30-year mortgage rate hovers near 7% nearly double what it was in 2019,” Turner said. “It’s time to stop relying on outdated policies and start fresh. The status quo simply isn’t working.”
Prioritizing Efficiency Over Expansion
The proposed budget embraces a more streamlined approach to housing assistance, aiming to do more with less by reducing or eliminating several longstanding HUD programs. Secretary Turner said the goal is to give states more responsibility and more flexibility to tackle their own housing challenges, in line with President Trump’s push to cut federal spending and reduce regulatory barriers.
The proposed changes include:
- Ending the Community Development Block Grant (CDBG) Program: This would eliminate more than $3 billion annually in federal grants currently provided to cities and counties for infrastructure and housing-related activities.
- Cutting the HOME Investment Partnerships Program: A longstanding grant program that helps fund low-income housing development. HUD estimates this would save about $1.25 billion per year.
- Streamlining Native Housing Assistance: The budget would remove the Native Hawaiian Housing Block Grant and simplify funding to Native American housing programs, potentially saving $480 million annually.
- Overhauling Homeless Assistance Programs: HUD wants to merge current programs like the Continuum of Care and Housing Opportunities for Persons with AIDS into a reformed Emergency Solutions Grant, saving approximately $532 million.
- Tapping into Unspent Funds for Healthy Homes Initiatives: Programs aimed at lead hazard reduction would see funding halted until existing balances are used, projected to save $296 million.
- Eliminating Self-Sufficiency Programs: Programs aimed at helping renters become homeowners or financially independent would be removed, freeing up $196 million.
- Defunding PRO Housing and DEI Initiatives: The budget proposal includes ending the Pathways to Removing Obstacles to Housing program and other equity-focused efforts, which would save around $100 million.
- Ending Fair Housing Grants: By cutting the Fair Housing Initiatives Program (FHIP) and associated training academies, HUD projects an annual savings of $60 million.
A New Era of State-Led Housing Solutions
At the heart of the new budget is a major shift in philosophy. HUD wants states to play a bigger role in how housing dollars are spent tailoring solutions to their specific needs rather than following a one-size-fits-all federal template.
“This isn’t about helping fewer people,” Turner said. “It’s about helping them better. States understand their communities best. We want to give them the tools and the responsibility to lead.”
Concerns and Questions from Lawmakers
Not all members of Congress are sold on the proposed changes. Senator Steve Womack, who chairs the THUD subcommittee, acknowledged that HUD programs have inefficiencies but warned against cuts that could be too aggressive.
“There’s fat to trim, yes,” Womack said. “But if we cut too deep, HUD won’t be able to help the people who need it most.”
Turner responded by emphasizing that the shift would give states more ownership of their housing challenges, helping them become more responsive and innovative in addressing local needs.
“This is about culture change,” Turner told lawmakers. “We’re asking states to step up. We’re giving them the flexibility to make decisions that directly impact their residents and we believe that will lead to better outcomes.”
The Bigger Picture
The Trump administration’s proposed FY 2026 budget reflects a broader effort to reduce federal spending, empower states, and reimagine the role of HUD. Critics argue the cuts could leave vulnerable populations without needed support. Supporters say it’s a long-overdue correction to an inefficient system.
Ultimately, the debate centers on one question: Can cutting back on federal housing programs while increasing state control lead to more effective solutions? That’s the conversation now unfolding in Congress. For more information about finance visit Nadlan Capital Group.