A federal judge has issued a temporary order blocking the U.S. Department of Housing and Urban Development (HUD) from implementing major changes to the nation’s homelessness funding system, warning that the abrupt policy shift could destabilize housing services and place thousands of vulnerable individuals at risk.
U.S. District Judge Mary S. McElroy granted a preliminary injunction after a broad coalition of states, municipalities, and nonprofit organizations challenged the Trump administration’s proposed overhaul of the Continuum of Care program. The program distributes more than $3 billion annually to support housing and assistance for people experiencing homelessness across the country.
The court’s decision prevents HUD from withdrawing its existing funding notice and replacing it with new rules that would significantly reduce support for permanent supportive housing. Judge McElroy ruled that the plaintiffs demonstrated a strong likelihood that the agency’s actions conflicted with federal law, particularly the McKinney-Vento Homeless Assistance Act, which prioritizes long-term housing stability.
In her remarks from the bench, the judge expressed concern over what she described as repeated last-minute changes and delays by the agency. She noted that HUD’s shifting timeline and incomplete disclosures created uncertainty for service providers who rely on predictable funding cycles to keep housing programs operational during winter months.
Under the blocked proposal, HUD planned to redirect a substantial share of funding toward transitional housing programs, many of which require participants to meet conditions related to employment, treatment, or counseling. The revised framework would have capped spending on permanent supportive housing at a significantly lower level than in previous years, reversing decades of bipartisan policy aimed at reducing chronic homelessness.
Organizations that brought the lawsuit argued the changes would have forced widespread cuts to existing housing placements, potentially displacing tens of thousands of people, including families with children, veterans, seniors, and individuals with disabilities. Housing advocates said the uncertainty alone had already disrupted planning efforts nationwide.
Local officials from several states submitted declarations outlining projected impacts. In some regions, nonprofit providers estimated that hundreds of people could lose housing if federal funding were reduced or delayed. Others warned that long-standing supportive housing projects could be dismantled entirely.
The proposed funding rules also included new eligibility restrictions tied to compliance with broader federal policy priorities, further fueling concerns among local governments and service organizations about reduced access to critical resources.
Following the ruling, a HUD spokesperson said the department remains committed to reforming homelessness programs while adhering to legal requirements. Judge McElroy indicated a written opinion will follow, but the injunction will remain in place while the case proceeds.
The decision offers temporary relief for housing providers and the people they serve, preserving existing funding structures as the legal challenge continues.
