Implications of Further HUD Staffing Cuts on the Housing Sector

Author: Ben Metcalf

Recent reporting suggests that the U.S. Department of Housing and Urban Development (HUD) is facing sweeping layoffs, with potentially up to half of its total workforce to be eliminated within the next two months. Already, as of mid-March, approximately 15 percent of staff have been removed through a combination of terminating all probationary employees, accelerating retirement offers, and pursuing an initial reduction in force directed to all non-supervisory field policy and management staff. In addition, recent reporting^[1] over the last week suggests planned closures of entire HUD field offices in 34 states plus the District of Columbia. And more across-the-board cuts within HUD’s staffing at headquarters are anticipated.^[2]

Staffing reductions at this scale threaten to cripple HUD’s ability to perform basic functions, and put millions of people at risk who rely on federally funded housing assistance. Moreover, they could stall billions of dollars in pending private investment—both the construction of new market-rate and affordable housing, as well as essential renovation and rebuilding of existing housing.

HUD can be more efficient and there are plausible ways to reduce headcount but not like this. This commentary previews consequences of widespread layoffs, while offering an alternative approach that draws on my own experience leading HUD’s Office of Multifamily Housing Programs through a reorganization in the 2010s. This reorganization increased the Office’s productivity across a range of metrics while still boosting overall morale and effectuating a reduction in overall headcount.

What Would the Imminent Elimination of Half of HUD’s Staffing Look Like?

Laying off thousands of HUD employees en masse would be detrimental to communities across the country. Shelters will close, federally funded housing construction projects will get pushed back, potential homebuyers may find themselves unable to qualify for mortgages, households receiving rental assistance may face rent increases or evictions, and communities impacted by disasters may not be able to promptly access the resources needed to rebuild. It’s a challenge to succinctly summarize (or even know for sure) the manifold ways in which crucial supports will weaken.^[3]

Given the affordable housing crisis nationwide, it was affirming to see that President Trump signed a Day 1 executive directive calling for his Administration to focus on tackling housing affordability and increasing housing supply. However, reducing HUD staff in this way would contradict those goals.

For example, the Federal Housing Administration (FHA—an office within HUD) expands access to homeownership: in 2023, 82% percent of new FHA purchase loans were for first time homebuyers.^[4] What is lesser known is that FHA also plays a vital role in expanding and preserving the supply of apartments, providing insurance for the construction or rehabilitation of higher-risk properties that often can’t find financing elsewhere. Without a responsive FHA, private lenders will likely pull back from lending, jeopardizing new home purchases and housing construction. And cutting staff is likely to reduce net revenues to the federal government, as FHA programs bring in more income in fees than it costs to operate those programs.

Cuts to HUD staff would also impact cities and counties receiving HUD block grant funding for affordable housing or community development investments. Reducing staff in these areas will slow responsiveness, increase fraud risk, and weaken protections for vulnerable residents. It will also delay or stall new affordable housing projects, which frequently use HOME funds (affordable housing block grants) as seed money to catalyze equity investment through Low- Income Housing Tax Credits and private debt.

In addition, today some five million households live in multifamily properties supported by long-term federal subsidy contracts. Every year thousands of these properties come due for renovation and recapitalization, and they overwhelmingly turn to private lenders to finance the repairs. But without staff from HUD’s offices of Multifamily Housing Programs and Public and Indian Housing to confirm the ongoing subsidy contracts and provide the necessary approvals, billions of private dollars in upgrades and improvements may be delayed.

Cuts to HUD’s Office of Policy Development and Research (PD&R) could also have significant impacts on housing markets and affordability efforts. PD&R plays a crucial role in providing market data, such as calculating Area Median Incomes and fair-market rents, that core programs depend on, such as the Low-Income Housing Tax Credit, the Section 8 Housing Choice Voucher program, and some FHA multifamily mortgages. PD&R’s research also critically lifts up best practices that drive innovation in the field and advance evidence-based policy changes that have helped HUD become more nimble, effective, and collaborative.

And of course, adding to the challenge, many of the staff reductions are expected to come from HUD’s administrative support functions, such as legal, IT, and human resources. Slashing back-office operations will force program staff to divert their attention from delivering housing assistance to administrative tasks, thus delaying project approvals, impeding oversight, and further straining an already overburdened agency.

Lessons from HUD’s Multifamily for Tomorrow Transformation

During my time at HUD, I oversaw the Office of Multifamily Housing Programs, which administers FHA multifamily lending, asset management of project-based Section 8 contracts, and grant programs for special needs housing. Like many who enter government, I came in hoping to spend my time designing new policies and programs. But after seeing the ways in which programs and policies foundered—and talking at length with the HUD staff administering this work—it was clear to me that more fundamental operational improvements were needed. As it turned out, I ended up helping to lead one of the larger reorganizations in HUD’s history.

When I started in 2010, the Multifamily office had more than 1,500 people spread across almost 60 mostly small, disconnected offices. Staff frequently lacked access to the training necessary to keep up with innovation in the private sector—such as familiarity with Low-Income Housing Tax Credits and other creative financing structures. Meanwhile, a large portion of the workforce was at or near retirement age, putting key institutional knowledge at risk of being lost. Compounding this structural problem, staff often worked in isolation on narrow tasks, addressing a web of compliance-related items, without ready visibility into the bigger picture of underlying risk or policy benefit. Also, a problematic reliance on paper files and the absence of a fully functional software performance system made it incredibly rare, for example, for a backlog of work at one over-capacity location to be transferred to staff at another comparatively under-capacity location. These were all fixable problems, but left unattended, they had contributed to a build-up of poor morale, a variety of inefficiencies, and customer service challenges.

Over several years, with strong support from leadership at every level in HUD, we reclassified and reassigned every staff position, took each employee offline for two to three weeks of intensive training, implemented risk-based processing and asset management protocols, and set higher standards for accountability across the board. Along the way, we also made the decision to close several small, under-resourced offices, consolidating Multifamily operations down to 18 field offices that hosted scaled teams that could work together far more effectively. We did this over several years by slowing down new hiring and assisting staff in sub-scale offices in accessing voluntary retirements and/or other opportunities at HUD or elsewhere in the federal workforce when relocation was not the right choice for them.

The restructuring of HUD’s Multifamily wasn’t easy. We faced many initial questions from HUD’s unions, resistance from members of Congress who didn’t want to lose federal jobs in their districts, and numerous concerns from HUD stakeholders and employees who worried about change.

But with sustained effort, not only were our processing times and error rates substantially decreased but, by 2016, these efficiencies were allowing us to increase overall loan origination volume and reduce defaults and delinquencies—all with a headcount 20 percent lower than when we started. Seeing this transformation of the HUD workforce represented some of the hardest and most rewarding work of my time in federal government.

A Better Path Forward

An approach of “cut first, ask questions later” risks being shortsighted and counterproductive. Encouragingly, HUD Secretary Scott Turner’s March 12 video message^[5] pushed back on the recent media on upcoming staff cuts, affirming that HUD will “not slow down mission-critical functions and processes… We will not disrupt the role of field offices with sweeping closures… Changes will be data-driven and strategic.” He affirmed that HUD will fulfill its core functions and statutory obligations while stressing the need for change. In line with Secretary Turner’s messaging, he and his team should consider an approach that:

• Focuses on outcomes over processes by tackling the underlying regulations and guidance that unnecessarily eat up staff time, lead to a compliance mentality, and complicate the ability to promptly get results for actions with low associated risk.
• Invests in team capacity, including enabling collaborative work through strategies such as holding stand-up meetings, providing advancement opportunities, and fostering staffing resiliency.
• Trains staff with the skills necessary to keep pace with rapidly evolving industry changes.
• Establishes centers of excellence to consolidate expertise, maintain institutional history, and continually problem-solve solutions to emerging issues.
• Upgrades IT systems to streamline processes, reduce inefficiencies, and better enable the use of performance metrics and long-term evaluations.

By making these kinds of strategic investments, opportunities to right-size the workforce will emerge naturally—without the chaos, risk, and harm that come from mass layoffs. The country can’t risk across-the-board cuts in the middle of an affordable housing crisis; it needs leadership willing to do the hard work of building a more effective and entrepreneurial Department to lead national housing solutions.

The views expressed are those of the author and do not represent the views of Terner Center’s funders or of the University of California Berkeley. Funders do not determine research findings or recommendations of Terner Center research and policy experts.

Endnotes

^[1] Capps, K. (2025). “Trump Administration Plans to Eliminate Dozens of Housing Offices.” Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/2025-03-05/hud-plans-to-eliminate-dozens-of-state-and-local-field-offices

^[2] Ho, S. and Bedayn, J. (2025). “Trump administration looks to slash HUD workers tackling the housing crisis.” Associated Press. Retrieved from: https://apnews.com/article/doge-hud-trump-turner-affordable-housing-musk-0176c8539fa9b5959198c351c97b8652

^[3] For a more detailed summary of impacts, see: National Association of Affordable Housing Lenders. (2025). “The Real Cost of Cuts to HUD, USDA, and Treasury,” Retrieved from: https://naahl.wpenginepowered.com/wp-content/uploads/2025/03/NAAHL-Cost-of-Cuts-Report-2025.pdf

^[4] Urban Institute Housing Finance Policy Center. (2023). “Housing Finance at a Glance: A Monthly Chartbook.” Retrieved from: https://www.urban.org/sites/default/files/2023-12/Housing%20Finance%20At%20a%20Glance%20Monthly%20Chartbook%20December%202023.pdf

^[5] Video of U.S. Department of Housing and Urban Development Secretary Scott Turner, March 12, 2025. Retrieved from: https://x.com/SecretaryTurner/status/1900006223497290148