What the ROAD to Housing Act changes in CDBG and HOME

The two block grants cities lean on most for housing both change under the 21st Century ROAD to Housing Act. Most of the changes widen what the money can pay for; one ties part of many large cities’ CDBG money to how fast they add housing.

Checked against the enacted text of Public Law 119-101 · Updated September 14, 2026

At a glance

Section 204 (CDBG): New construction of affordable housing becomes an eligible CDBG activity, up to 20% of a recipient's grant, for money appropriated after July 11, 2026.
Section 213 (CDBG): The Build Now Act. From fiscal year 2029 through 2043, large cities and urban counties whose housing growth improves less than the median lose 10% of their CDBG allocation, and that money goes as bonuses to those improving faster.
Section 501 (HOME): Reauthorizes the HOME program and changes who it serves, what it can pay for and how its projects are reviewed.
Sections 207 and 208: Two new competitive grant programs: planning grants that cannot pay for construction, and an Innovation Fund for places that have increased their housing supply.
Section 210 (RESIDE): The RESIDE conversion pilot is written into the HOME statute, which is why its grants go to HOME participating jurisdictions.

CDBG can pay for new affordable housing (Section 204)

Section 204 adds new construction of affordable housing to the list of activities a Community Development Block Grant can fund.

Spending on it is capped at 20% of the amounts allocated to a recipient, and the housing has to meet HOME’s definition of affordable housing. The low- and moderate-income benefit test for housing now counts new construction alongside acquisition and rehabilitation. The change applies only to money appropriated after July 11, 2026.

The Build Now Act ties CDBG to housing growth (Section 213)

Starting in fiscal year 2029, many large cities and urban counties will see their CDBG allocations move up or down based on whether their housing growth is improving.

Who it covers. Metropolitan cities and urban counties that receive CDBG, except any that:

have both a median Small Area Fair Market Rent at or below the 60th percentile of those places and a median home value below the national median;
have a rental vacancy rate above the national rate;
had a major federal disaster or emergency declaration in the previous three years; or
lack the legal authority to enact or update zoning and permitting ordinances.

How it is measured. HUD compares each place’s average annual growth in housing units over the latest five-year window with the five years before, using the Census Bureau’s address counts at the block level. The result is its “housing growth improvement rate.”

What happens. A place below the median improvement rate loses 10% of its CDBG allocation. A place at or above the median, or one already growing at least 4% a year, receives a bonus. The bonuses are paid from the cuts and shared in proportion to the homes each place added.

When. HUD had to tell each eligible recipient its rate within 60 days of enactment and must publish the rates before each year’s allocations. The adjustments run from fiscal year 2029 through fiscal year 2043 and do not touch money appropriated before the Act became law.

HOME reauthorized and reformed (Section 501)

Section 501, the HOME Investment Partnerships Reauthorization and Reform Act, is one of the longest sections in the law.

Authorization: Reauthorizes the HOME Investment Partnerships program, without naming a dollar amount.
Who it serves: HOME homeownership assistance may serve families earning up to 100% of area median income, up from the low-income limit of 80%.
What it pays for: HUD may not restrict a participating jurisdiction's choice among rehabilitation, new construction, reconstruction, acquisition and other eligible uses unless the statute allows it. Jurisdictions that do not receive CDBG may spend HOME money on water, sewer, road and utility improvements directly tied to HOME- or tax-credit-assisted housing.
Rental units: A rental unit counts as affordable when it is occupied by a tenant with a Section 8 tenant-based voucher and the rent stays within what the public housing agency approves.
Homeownership: The value limit for HOME-assisted homes rises from 95% to 110% of the area's median purchase price, and affordability can be preserved through shared equity, community land trusts, limited-equity cooperatives and similar models.
Environmental review: Four kinds of HOME projects, including rehabilitation and new construction of 15 or fewer units, become exempt from NEPA review by statute. Environmental review changes →
Small projects: Section 3 economic-opportunity requirements no longer apply to HOME projects of 50 or fewer units carried out by state recipients or by jurisdictions allocated less than $3 million.
Community land trusts: Adds a statutory definition of a community land trust, including affordability kept for at least 30 years.
Nonprofit set-aside: Housing counts toward the set-aside for community housing development organizations when one materially participates in its ownership or development.
Allocations: Raises a $500,000 threshold in HOME's allocation rules to $750,000, and lets HUD deny reallocated funds to jurisdictions that fail to comply with the program.
Buy America: HUD must review how Build America, Buy America requirements apply to HOME within 180 days of enactment and update its guidance within 90 days after that.

Two new grant programs (Sections 207 and 208)

Planning and implementation grants (Section 207). HUD must set up a competitive program within a year for states, insular areas, metropolitan cities, urban counties and regional planning agencies. The money can pay for housing plans, zoning code updates, inspection capacity and reducing barriers to housing supply, but not for construction, alteration or repair, and no more than 10% can go to administration. The program ends five years after enactment, and the section names no dollar amount.

Innovation Fund (Section 208). HUD must set up competitive grants within a year for metropolitan cities, urban counties, local governments and tribes that show an objective improvement in housing supply growth, under a method HUD publishes for 90 days of public comment before the funding notice. Grants can pay for CDBG-eligible activities, local and regional transportation projects, and initiatives that expand attainable housing. Up to $200 million a year is authorized for fiscal years 2027 through 2031, adjusted for inflation, and the program ends seven years after enactment.

What this means for converting buildings into housing

HOME is the program closest to conversion work. Section 501 keeps HUD from steering a jurisdiction away from any eligible use it chooses and exempts HOME-funded rehabilitation from NEPA review, and the RESIDE conversion pilot sits in the same statute. CDBG’s new-construction allowance and the Build Now Act change how much flexible money a city has for housing overall, starting with money appropriated after enactment. Whether a given city gains or loses under Build Now depends on HUD’s calculations, which this site does not model.

Questions

Can CDBG money pay for new housing construction under the ROAD to Housing Act?

Yes, within limits. Section 204 adds new construction of affordable housing to the activities the Community Development Block Grant can pay for, capped at 20% of a recipient's grant. It applies only to money appropriated after the Act became law on July 11, 2026.

What is the Build Now Act?

Section 213 of the ROAD to Housing Act. It compares each eligible large city's or urban county's housing growth over the latest five years with the five years before. Those improving less than the median lose 10% of their CDBG allocation; those at or above the median, or growing at least 4% a year, share that money as bonuses in proportion to the homes they added. Places with low rents and home values, high rental vacancy, a recent federal disaster declaration or no zoning authority are excluded.

When does the Build Now Act take effect?

Its allocation changes begin in the third full fiscal year after enactment, fiscal year 2029, and run through fiscal year 2043. HUD had to notify each eligible recipient of its housing growth improvement rate within 60 days of enactment, and must publish the rates before each year's allocations.

What does the ROAD to Housing Act change in the HOME program?

Section 501 reauthorizes HOME and raises the income limit for HOME homeownership assistance to 100% of area median income. It bars HUD from restricting which eligible uses a jurisdiction chooses, exempts rehabilitation and several other HOME projects from NEPA review, raises the home value limit to 110% of the median purchase price, and adds rules for community land trusts, small projects and reallocations.

Does the ROAD to Housing Act add money to CDBG or HOME?

No. It reauthorizes HOME without naming an amount and changes how CDBG money can be used and allocated, but both programs are still funded through annual appropriations. The only section that authorizes its own amount is the new Innovation Fund, up to $200 million a year in fiscal years 2027 through 2031.

Sources

More on the law: The ROAD to Housing Act explained · Environmental review changes · Opportunity Zones