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 October 26, 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. The Build Now Act explained →
Section 501 (HOME): Reauthorizes the HOME program and changes who it serves, what it can pay for and how its projects are reviewed.
Section 207: A new competitive grant for housing planning and zoning work that cannot pay for construction, and names no dollar amount.
Section 208: The Innovation Fund: $250,000 to $10 million grants for places that have increased their housing supply, with $200 million a year authorized for fiscal years 2027 through 2031, adjusted for inflation. The Innovation Fund explained →
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.

A place below the median housing growth improvement rate loses 10% of its CDBG allocation, and the cuts are paid out as bonuses to places at or above the median, or growing at least 4% a year, in proportion to the homes each added. Places with low rents and home values, high rental vacancy, a recent federal disaster declaration or no authority over zoning are excluded. The adjustments run from fiscal year 2029 through 2043.

The rate is a formula written into the statute. It generally rewards housing growth that is improving, with a separate route for places already growing at least 4% a year. The Build Now Act explained works through it with examples, the years each window covers and where the text is unclear.

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, sidewalk, road and utility improvements directly related to, and located within or immediately adjacent to, HOME- or tax-credit-assisted housing. CDBG's labor standards, including Davis-Bacon wage rates, apply to that work, and HUD must issue rules for it within a year of enactment.
Rental units: A rental unit counts as affordable when it is occupied by a tenant with a Section 8 tenant-based voucher, the tenant's share of the rent stays within what the voucher program permits, and the total 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: Set-aside money reserved for community housing development organizations that stays uninvested for 24 months is released to the jurisdiction for any eligible HOME activity, with or without a CHDO taking part. Housing also counts toward the set-aside when a CHDO materially participates in its ownership or development, as HUD determines.
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.

Not all of this is usable yet. Section 501 gives HUD until July 11, 2027 to issue rules for the infrastructure use and for the environmental review changes, sets deadlines for a Buy America review and guidance, and leaves the area income figures and what counts as CHDO participation to HUD. As of October 27, 2026, a search of the Federal Register found no HUD rule or notice carrying out Section 501. Until HUD acts, check its guidance before relying on a change that needs it.

Planning and implementation grants (Section 207)

A new competitive grant for the planning and zoning work that comes before housing gets built, but not for building it.

HUD must set the program up within a year of enactment, by July 11, 2027. The grants cannot pay for construction, alteration or repair, no more than 10% can go to administrative costs, and the section names no dollar amount, so the program has only what Congress chooses to appropriate. HUD may not start it after July 11, 2031, and it ends that day.

Two kinds of recipient, two sets of uses. Regional planning agencies, and consortia of them, may use the money only to plan: writing housing plans, substantially improving state or local housing strategies, drafting new regulatory processes, updating zoning codes, building capacity for housing inspections and for reducing barriers to supply, and community development plans aimed at affordable housing, public transit access and location-efficient development.

States, insular areas, metropolitan cities and urban counties may also carry plans out: implementing and administering housing strategies and plans, funding community investments that serve their goals, administering reformed zoning codes, and the same inspection and barrier-reduction capacity. A “housing plan” here means one that raises supply to meet demand, improves affordability, accessibility for people with disabilities and housing quality, reduces barriers to development and coordinates with transportation agencies. HUD must coordinate the program with the Federal Transit Administration where it can.

The Innovation Fund (Section 208)

Competitive grants of $250,000 to $10 million for local governments and tribes that have increased their housing supply.

HUD must make at least 25 awards a year, or fewer if appropriations are too small to fund that many within the award limits. $200 million a year is authorized for fiscal years 2027 through 2031, adjusted for inflation, but an authorization is not funding. Grants can pay for anything CDBG can fund, for local and regional transportation projects, and for local initiatives that expand attainable housing. Eligibility depends on a measure of housing supply growth HUD has not yet published. The Innovation Fund explained covers who qualifies, the twelve kinds of local reform it rewards and what an application must show.

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 applies to money appropriated after enactment. The Build Now Act’s allocation adjustments start separately, in fiscal year 2029. 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.

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: $200 million a year for fiscal years 2027 through 2031, adjusted for inflation. An authorization is not an appropriation.

Sources

More on the law: The ROAD to Housing Act explained · Environmental review changes · Opportunity Zones · The Innovation Fund · Innovation Fund reforms, city by city · The Build Now Act · Manufactured housing and the chassis rule · Chassis-free manufactured homes by state · RESIDE Act funding status · How RESIDE grants should be sized · The ban on large investors buying homes