The First Circuit Court of Appeals has cleared the Department of Housing and Urban Development to move forward with a major overhaul of the nation's homelessness programs, ending months of litigation that had blocked the changes. The ruling allows HUD to redefine how it measures success and to direct funding toward programs that prioritize recovery, stability and self-sufficiency over permanent housing placement alone.
The decision marks a significant shift in federal homelessness policy, which for more than a decade has centered on the Housing First model. Under that approach, established as the predominant federal strategy in 2013, permanent housing placement was prioritized without requiring treatment, sobriety or other preconditions. The promised goal of ending homelessness within a decade never materialized. By 2025, despite a 151 percent increase in taxpayer-funded beds, overall homelessness had risen 27 percent and chronic homelessness had surged 81 percent, reaching the highest levels ever recorded in the nation's history.
At the heart of the dispute is how the federal government defines and counts homelessness. HUD's Point-in-Time count excludes people already living in taxpayer-funded permanent housing for the homeless, even though roughly 83 percent of the agency's homelessness resources are devoted to housing them. That creates a contradiction: if those individuals are no longer counted as homeless, why does the nation's largest homelessness agency continue directing the majority of its resources toward housing them?
A separate statistical issue involves rapid rehousing. HUD classifies rapid rehousing as permanent housing even though its rental assistance is time-limited to 24 months. A family moved into rapid rehousing disappears from the point-in-time count, while a family placed in transitional housing, which can also last up to 24 months, remains officially homeless. HUD itself attributed declines in reported family homelessness in 2018 largely to a shift away from transitional housing toward rapid rehousing.
When these populations are combined, the picture changes dramatically. In 2025, 1,456,923 Americans were either homeless or living in taxpayer-subsidized housing, nearly twice the 745,652 captured by the headline point-in-time count. That gap illustrates a core flaw in defining success primarily through housing status: the statistic can improve the moment someone enters a program classified as permanent housing, long before it is known whether that person has achieved lasting stability.
HUD has also repeatedly changed how it defines and calculates chronic homelessness, making year-to-year comparisons increasingly difficult. Some changes temporarily altered who qualified as chronically homeless and therefore who appeared in federal statistics. This year, the agency calculated that chronic homelessness is 81 percent higher than it was in 2013.
Perhaps the most consequential definitional issue involves homeless children and families. In 2011, HUD adopted a far narrower standard than the McKinney-Vento definition codified by Congress to identify homeless children and youth in schools. The result is a federal contradiction: a child can be officially homeless under federal law while at school, yet that same child and family are moved into the shadows under HUD's narrow definition simply because, after losing their housing, they are sleeping on someone else's couch or in a motel room the government is not funding.
The disparity is staggering. The Department of Education identified roughly 1.5 million homeless K-12 students in the 2023-24 school year, a figure that includes only students and does not count their parents, younger siblings not yet enrolled in school or other family members experiencing homelessness alongside them. Applying a conservative household adjustment suggests those students could represent more than 2.3 million Americans experiencing homelessness within families.
With the court's decision, HUD can now measure success by whether people are recovering, working, reconnecting and reclaiming their lives. Housing remains important, but the reforms position recovery, stability and self-sufficiency as the finish line rather than housing placement alone.