Public Housing in America: Past and Present

Public housing is rental housing that is owned and managed by a local public housing agency and paid for largely with federal money. It began with the Housing Act of 1937, grew to more than 1.4 million apartments at its peak, and then shrank as Congress stopped funding new construction, tore down its most troubled buildings, and shifted toward subsidizing private landlords instead.

The program still matters. As of December 1, 2025, HUD’s public housing data dashboard counted 865,449 units, home to about 1.5 million people, run by 2,667 local agencies, according to the National Low Income Housing Coalition (NLIHC). This guide traces how the program got here, from the Depression to HOPE VI, the Faircloth limit, and today’s RAD conversions, and lays out the main arguments about its future.

How Public Housing Works

The basic structure has barely changed since 1937. Washington sets the rules and provides money. States charter local housing agencies, which own the buildings, pick tenants, and handle maintenance. A long-term contract between HUD and each agency, called an Annual Contributions Contract, ties the two together.

Today the public housing program runs on three revenue sources:

• Tenant rents. Residents generally pay the highest of 30% of adjusted monthly income, 10% of gross monthly income, a welfare shelter allowance, or an agency-set minimum rent of up to $50. This calculation is known as the total tenant payment.
• The Operating Fund, a formula grant that fills the gap between rents and day-to-day costs such as maintenance, utilities, and staff.
• The Capital Fund, a formula grant for major repairs and modernization.

Households must earn less than 80% of area median income to qualify. Federal law also requires that at least 40% of the units an agency fills each year go to extremely low-income families. In practice the program reaches far deeper than that floor. HUD data show that 73% of public housing households were extremely low income in 2024.

Origins: The Housing Act of 1937

Public housing grew out of the Great Depression and had two goals: replace unsanitary slums with decent low-cost homes, and create construction jobs. Opponents called it a step toward socialism, builders argued the private market could do the job, and some local governments feared federal intrusion.

The 1937 act tried to defuse those objections in several ways:

• Local control. Only locally governed agencies could build and own the housing, so communities could stay out simply by not creating one.
• Rents had to cover operations. Tenants needed enough income to pay rent, but not too much: a household’s income could not exceed five times the rent (six times for large families), to avoid competing with private landlords.
• Slum clearance. For each new unit built, one unsafe or unsanitary unit had to be eliminated.

The earliest residents were mostly working-class families made “temporarily poor” by the Depression. The Lanham Act of 1940 then redirected federal efforts toward housing war workers. By the end of the 1940s, about 200,000 public housing units had been built.

Postwar Expansion and the High-Rise Era

The Housing Act of 1949 restarted the program with a national goal of “a decent home and a suitable living environment for every American family.” It authorized 810,000 new public housing units over six years and tied the program to urban renewal, requiring agencies to give preference to families displaced by slum clearance.

The goal was never met. Korean War shortages, congressional cutbacks, and local opposition slowed construction; by the end of 1957 only about 210,000 of the authorized units were under management. At the same time, the tenant population changed. Lower income limits, rules evicting families who earned too much, and urban renewal preferences meant public housing increasingly served the poorest households. The share of nonwhite families living in public housing rose from 36% to 46% during the 1950s. In an era of legal segregation, that shift fueled resistance to new projects in white neighborhoods and kept many developments racially segregated.

The stock still grew, from about 500,000 units at the start of the 1960s to more than 800,000 by the decade’s end. During the 1960s a presidential order, Supreme Court decisions, and civil rights laws made racial discrimination and segregation in public housing illegal, though courts often had to force change (see Redlining, Segregation, and Fair Housing). Worried about concentrated poverty, Congress banned new high-rise public housing for families in the Housing and Urban Development Act of 1968.

Decline: Rents, Repairs, and the Turn to Section 8

By the late 1960s, very poor tenants could not pay rents high enough to maintain the buildings, yet many paid more than they could afford. The Brooke Amendment of 1969 capped rents at 25% of income, and Congress began paying operating subsidies to make up the difference. But those subsidies often fell short, and some developments slid into severe disrepair.

The federal government then moved away from building public housing:

Between 1975 and 1979, commitments for new Section 8 units outnumbered commitments for new public housing units by more than seven to one, according to CRS. The voucher program that grew out of Section 8 is now the much larger form of federal rental help (see Housing Choice Vouchers Explained).

HOPE VI: Rebuilding the Most Distressed Projects

In 1992 the National Commission on Severely Distressed Public Housing classified about 6% of the stock, or roughly 86,000 units, as severely distressed. It described residents living in fear of crime and buildings so deteriorated they were physically dangerous. Congress responded in the FY 1993 appropriations act with a $300 million Urban Revitalization Demonstration that became known as HOPE VI.

HOPE VI gave competitive grants to housing agencies to demolish or rebuild distressed projects, usually replacing them with lower-density mixed-income housing. Grants also paid for relocation and supportive services, and agencies were expected to combine them with private financing, often including Low-Income Housing Tax Credits.

The results were mixed, according to the Congressional Research Service (CRS):

• Scale. HUD made 268 revitalization grants, including Main Street grants, in 41 states, districts, and territories. As of June 2009, HOPE VI had demolished 93,295 public housing units and built or substantially rehabilitated 78,692 replacement units, not all of them public housing.
• Return rates. Agencies’ estimates of how many original residents would move back fell from 61% in 1999 to 38% in 2006. Some families chose to stay where they had relocated, and others failed new screening criteria.
• Outcomes for movers. An Urban Institute study of eight sites found that relocated families generally ended up in safer neighborhoods and better housing.
• Slow spending. Unspent balances peaked at more than $3.3 billion in FY 2003.

Supporters credit HOPE VI with replacing some of the most dangerous public housing in the country. Critics point to the net loss of deeply affordable units and the displacement of residents. Congress gave the program no new money starting in FY 2012. Its successor, the Choice Neighborhoods Initiative, extends a similar approach to other HUD-assisted housing and surrounding neighborhoods. Congress provided $25 million for it in FY 2026, according to NLIHC.

The Faircloth Limit

The 1998 reform law added what is known as the Faircloth limit, named for Senator Lauch Faircloth of North Carolina. Under Section 9(g)(3) of the Housing Act of 1937, an agency may not use Capital Fund or Operating Fund money to build public housing if doing so would push its total above the number of units it owned, assisted, or operated on October 1, 1999.

Because Congress had already stopped funding new public housing in FY 1994, the practical effect was to lock in a ceiling. As units are demolished or converted, agencies fall below their cap. The limit is not exhausted: HUD’s report of available Faircloth units showed that, as of December 31, 2024, agencies could add 278,345 public housing units without exceeding it. What they lack is construction money.

HUD’s “Faircloth-to-RAD” option, launched in 2021 and renamed RestoreREBUILD in 2024, tries to bridge that gap. An agency builds new units as public housing using its unused Faircloth authority, with advance approval to convert them to a long-term Section 8 contract once construction is complete. That steady contract is what lenders and investors need to finance the project.

RAD: Converting Public Housing to Section 8

Congress created the Rental Assistance Demonstration (RAD) in the FY 2012 HUD appropriations law. RAD lets an agency convert a public housing property to a long-term Section 8 contract, either project-based vouchers or project-based rental assistance. A long-term Section 8 contract gives lenders and investors a predictable income stream, so agencies and their partners can raise private debt and tax-credit equity to pay for repairs. RAD itself provides no new federal funding.

RAD started with a 60,000-unit cap, which Congress raised to 185,000, then 225,000, then 455,000 units. As of October 1, 2025, 188,493 public housing units had converted, according to NLIHC’s summary of HUD data. The 21st Century ROAD to Housing Act (Public Law 119-101), enacted July 11, 2026, removed RAD’s 2029 expiration date and raised its cap from 455,000 to 555,000 public housing units. It also requires HUD to assess and publish RAD’s effects each year, including how many original residents stay or return, and lets HUD impose penalties for material violations of RAD requirements.

Supporters, including the Obama, first Trump, and Biden administrations, see RAD as a practical way to fix aging buildings without new appropriations. Tenant advocates such as NLIHC opposed raising or removing the cap until HUD showed it would rigorously enforce resident protections, such as the right to return after renovation and rents that stay tied to income.

Public Housing Today

Figures are as reported in NLIHC’s 2026 Advocates’ Guide, except federal funding, which comes from NLIHC’s May 2026 budget chart. Both funds were lower than in FY 2025, when Congress provided $3.41 billion for the Capital Fund and $5.50 billion for the Operating Fund.

The stock’s physical condition is the central problem. A HUD-commissioned study estimated a $26 billion repair backlog in 2010. Later estimates using different methods are much larger: about $90 billion in a 2023 projection by the National Association of Housing and Redevelopment Officials, and nearly $170 billion in an October 2025 report from the Council of Large Public Housing Authorities. HUD officials have long estimated that more than 10,000 public housing units leave the inventory each year. Funding remains contested. The administration’s FY 2026 budget request proposed ending the Capital and Operating Funds and folding public housing into a new State Rental Assistance Block Grant. Congress did not adopt that plan and funded both for FY 2026.

Demand far outstrips supply. Public housing is not an entitlement, so the number of homes depends on appropriations rather than on how many families qualify. Applicants join an agency’s waitlist, and in many large cities the wait can stretch for years.

The Debate Over Public Housing’s Future

Views on public housing tend to fall into two camps.

Critics argue that public ownership concentrated very poor households in isolated, poorly maintained buildings, and that vouchers and privately owned subsidized housing serve families more flexibly and give them more choice of neighborhood. Many see RAD and mixed-finance redevelopment as overdue repairs to a broken model.

Defenders argue that public housing reaches the lowest-income households more reliably than almost any other program, that publicly owned land and buildings keep affordability permanent, and that the program’s problems come from decades of underfunding rather than from public ownership itself. Some point to social housing systems abroad as evidence that public ownership can work at scale (see Social Housing Models).

The Bottom Line

Public housing was the federal government’s first large commitment to housing low-income Americans. Fewer than 900,000 units remain from a peak of more than 1.4 million. Since the 1990s, federal policy has favored rebuilding (HOPE VI), capping growth (the Faircloth limit), and converting to Section 8 (RAD) over new construction. Whether those conversions preserve the program’s deep affordability, and whether unused Faircloth authority leads to new construction, will decide what public housing looks like over the next generation.