Federal Homelessness Funding Shifts to Treatment First
Housing and social-service operators that depend on HUD grants should expect eligibility criteria to change as Housing First gives way to treatment-based models.
Updated on Nov. 7, 2026 in Employment
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HUD announced that the 2026 nationwide Point-in-Time count recorded 698,425 homeless individuals on a single January night, a 6.3% decline since 2025 that the agency called the largest-ever nationwide drop. The department is also shifting federal policy away from the Housing First model toward Treatment First, which operators in housing, social services, and related contracting should track as it changes funding priorities.
Why it matters
HUD credited the decline to border enforcement and a replacement of the Biden-era approach, arguing that Housing First had driven homelessness up 28% between 2022 and 2025. The shift in framing matters to operators because it signals how federal grant criteria may change, even as the underlying causal claims remain contested.
The 2026 count recorded 698,425 homeless individuals nationally, a 6.3% decrease since 2025, while Los Angeles County (73,040) and the City of Los Angeles (45,194) both rose, by 1.2% and 3.4% respectively. Homelessness had increased 28% from 2022 to 2025 under the Housing First mandate, the comparator HUD uses for its policy case.
The players
U.S. Department of Housing and Urban Development (HUD)
The federal agency that administers housing assistance and homelessness grant programs across the country, and whose program criteria determine which service models qualify for federal funding.
President Donald Trump
The current President of the United States, who signed the July 2025 executive order directing federal agencies toward Treatment First homelessness policies.
The details
HUD is moving away from Housing First, which provides shelter without requiring addiction treatment first, and toward a Treatment First framework that emphasizes addressing substance abuse and connecting people with care. President Trump signed an executive order in July 2025 directing federal agencies to pursue this approach. Because federal housing dollars flow through HUD's program criteria, changes in which models qualify shape which providers and service arrangements are eligible.
Timeline
July 2025: Trump signs executive order directing federal agencies to pursue Treatment First policies.
2022 to 2025: Homelessness rises 28% under the Housing First mandate, according to HUD.
January 2026: Point-in-Time count records 698,425 homeless individuals nationwide.
November 6, 2026: HUD announces the record national decline and the policy shift.
Market Landscape
The move replaces the Housing First mandate set during the Biden administration with a Treatment First model under a July 2025 executive order. The policy reversal reorders which homelessness service models federal housing dollars favor, a dynamic that will play out across the providers that depend on HUD grants.
Operators in housing services and social-service contracting should expect grant criteria and eligible service models to shift as HUD implements Treatment First. Organizations whose programs are built around Housing First should review how the change affects their funding eligibility and staffing mix, and consult qualified counsel on any contract or compliance implications.
The takeaway
Track HUD's implementation guidance for Treatment First, since eligibility criteria will determine which service models receive federal funding. Consult qualified counsel before changing program design or staffing in response to the policy shift.
Further reading
For context on the labor and contracting side of the sector, see Employment coverage across United States businesses.
Source note: This article includes information reported by New York Post.
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