Federal Funds for Affordable Housing Construction: 'Strengthening Housing Supply Act' Opens Up CDBG Program

This bill, officially titled the Strengthening Housing Supply Act of 2025, makes a straightforward but significant change to how federal money can be used to tackle the housing crisis. Specifically, it updates the rules for the Community Development Block Grant (CDBG) Program, which is one of the largest sources of federal funding for local communities.

The Upgrade to the CDBG Toolkit

Right now, CDBG funds are often used for things like rehabilitating old housing or improving infrastructure in low-income areas. But when it comes to building brand-new affordable housing from the ground up, the rules have been pretty restrictive. This bill changes that: it explicitly adds the new construction of affordable housing as a qualified activity for CDBG funding. Think of it like giving local governments a new, powerful tool in their housing construction toolbox that they didn’t have before.

This isn't a free-for-all, though. The bill is careful to specify that this new housing must meet the existing federal definition of “affordable housing” found in the Cranston-Gonzalez National Affordable Housing Act. More importantly, it maintains the crucial requirement that the funds must benefit low- and moderate-income people, just like all other CDBG projects. This means if a city uses this money to build a new apartment complex, those units have to be priced right for folks who need them most.

What This Means for Your City and Your Wallet

For anyone struggling with rent or looking to buy in a tight market, this change is a big deal because it unlocks a new pool of money dedicated to increasing supply. Housing experts agree that one of the fastest ways to cool off overheated rental markets is to build more units, especially those that are income-restricted. This bill helps local governments and non-profit developers do exactly that.

For example, a small city currently relying on CDBG money only for fixing up old buildings might now be able to partner with a developer to build a 50-unit complex for working families, something that was previously off-limits for this specific funding stream. This flexibility is key for places dealing with severe housing shortages, whether they are booming urban centers or struggling rural areas.

It’s important to note the timing: these new rules only apply to CDBG funds that Congress sets aside after the bill becomes law. So, while it won't affect money already in the pipeline, it dramatically changes how future appropriations can be used to directly address the housing shortage through construction, combining policy smarts with practical action against rising housing costs.