Housing Act of 1937

What Is the Housing Act of 1937?

The Housing Act of 1937, formally the United States Housing Act of 1937, is the federal law that made public housing a permanent part of American policy. President Franklin D. Roosevelt signed it on September 1, 1937. It is often called the Wagner-Steagall Act, after Senator Robert Wagner of New York and Representative Henry Steagall of Alabama.

According to the Congressional Research Service (CRS), the program had two aims: give Depression-hit families decent, low-cost housing, and create construction jobs. Before the act, the federal government had built roughly 21,800 low-rent units directly between 1932 and 1937, through agencies including the Public Works Administration’s Housing Division.

How It Works

Public housing was controversial, so the act’s design was a compromise:

• Local ownership. Only state-chartered, locally governed public housing agencies could build and own projects. A community that never created one simply stayed out.
• Federal financing. Washington paid for construction under long-term Annual Contributions Contracts. These set federal rules but left design, location and tenant selection largely to local agencies.
• Rents covered operations. Tenant rents paid day-to-day costs, so residents needed steady incomes. To avoid competing with private landlords, incomes could not exceed five times the rent, or six times for large families.
• Slum clearance. For each new unit built, an unsafe or unsanitary unit had to be eliminated.

The act also created the United States Housing Authority in the Department of the Interior to run the program, according to the National Archives.

World War II soon diverted construction to housing for war workers. By the end of the 1940s, about 200,000 public housing units had been built and were under contract, CRS reports.

The Act Today

The 1937 Act remains on the books, starting at 42 U.S.C. § 1437, but Congress has rewritten it many times. The Housing Act of 1949 restarted public housing construction after the war. A 1974 law added the Section 8 rental assistance program to the act as a new section, and the Quality Housing and Work Responsibility Act of 1998 reshaped it again. Today the act is the legal foundation of both public housing and the Housing Choice Voucher program.

Why It Matters for Workforce Housing

Early public housing was not designed for the very poorest households. CRS describes its first residents as mainly working-class families who were “temporarily poor” because of the Depression, followed by war workers. Later changes, including lower income limits and priority for families displaced by urban renewal, shifted public housing toward the lowest-income renters.

The original model paired public financing with local public ownership and rents set to cover operating costs. That is one reason the 1937 Act often comes up in current debates about social housing and who public housing should serve.