UPDATE: HUD's Homelessness Funding Changes Are Moving Forward Again

On September 16th, the First Circuit Court of Appeals temporarily put a lower court ruling on hold that had blocked HUD's new FY2026 Continuum of Care funding rules. The court said HUD had made a strong showing that it was likely to succeed in its appeal and noted that further delays could create funding gaps.

Two days later, HUD reopened the FY2026 Continuum of Care competition, giving communities until September 30 at 8 p.m. ET to submit applications.

What's Changing?

The Continuum of Care program is one of the federal government's primary ways of funding local homelessness programs.

Under HUD's new approach, approximately $1.3 billion of the more than $4 billion competition is being set aside for transitional housing and supportive services only projects. The changes place greater emphasis on services intended to promote employment, treatment, recovery and self sufficiency.

That's a significant shift from the stronger emphasis federal homelessness policy has placed in recent years on permanent housing and Housing First approaches.

Supporters of HUD's changes argue that homelessness funding should place greater emphasis on services, recovery and pathways toward self sufficiency. Opponents argue that reducing the amount of funding protected for permanent housing could destabilize existing programs and put people who currently rely on that housing at risk.

What Happens Next?

The legal fight isn't over. The appeals court issued a stay while HUD's appeal continues, rather than a final ruling resolving the entire case. For now, however, HUD is allowed to move forward with the FY2026 competition under the revised rules.

That means Continuums of Care and homelessness organizations across the country now have a very short window to adjust and submit their applications.

For Georgia, this is one to watch closely. Changes in what HUD funds ultimately affect the local organizations providing housing and services to people experiencing homelessness. As communities adapt to the new federal priorities, we should begin seeing what that shift looks like on the ground.

Sources: HUD: FY2026 Continuum of Care Competition, First Circuit Court Order, September 16, 2026, Reuters