Community Development Grant Funds Emerge as Housing Incentive Lever in New Law, Realtor.com® Report Finds
Rhea-AI Summary
Realtor.com, part of News Corp (NASDAQ:NWS), released a report analyzing how the 21st Century ROAD to Housing Act’s Community Development Block Grant (CDBG) payout program could influence U.S. housing policy. The Act links CDBG allocations to local housing stock growth, boosting grants for communities that expand housing and trimming awards for those that fall short.
According to Realtor.com, the median city’s CDBG award equals just 0.33% of total revenue, with a median potential penalty of about $84,000, suggesting limited leverage in most large cities. The analysis, using 2023 HUD, Census and Realtor.com data, finds the incentives are most consequential in smaller, post‑industrial Midwest and Northeast markets where grants form a larger budget share and new construction is scarce.
Among large cities, the report highlights Milwaukee, Detroit, Toledo, Newark, Cleveland, Buffalo, Pittsburgh, Jersey City, Saint Louis and Minneapolis, which all rely more heavily on CDBG funds and have new‑construction listing shares far below the 17.9% national average (as low as 1.3%). New homes in many of these markets carry substantial price premiums, signaling constrained new supply. The program is designed to be self‑funding, with penalties financing bonuses, and exempts cities with limited zoning authority, high rental vacancies, low fair‑market rents or recent federally declared disasters. The median grant among analyzed cities was $839,525 in 2023.
Positive
- None.
Negative
- None.
Key Figures
Historical Context
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Jul 28 | Rental market report | Neutral | +2.9% | New York City median asking rent reached a record high |
| Jul 23 | Climate risk report | Negative | -3.9% | Severe weather exposure and higher insurance costs affected housing markets |
| Jul 21 | Earnings date notice | Neutral | -0.8% | News Corp scheduled fiscal fourth-quarter and full-year earnings results |
| Jul 21 | Housing market tool | Neutral | -3.1% | Realtor.com expanded its Market Clock tool to 100 metropolitan areas |
| Jul 20 | Starter home report | Negative | -0.7% | Affordable starter-home listings remained below 2019 levels |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Recent Realtor.com-related announcements produced mixed reactions, with two aligned declines and three divergences.
Key Terms
community development block grant regulatory
cdbg regulatory
AI-generated analysis. How Rhea-AI works. Not financial advice.
Smaller, post-industrial cities in the Midwest and Northeast stand to see the biggest impact from new construction incentives tied to Community Development Block Grants
The Act ties CDBG allotments to local housing growth, providing larger allocations to communities that expand their housing stock and reducing awards for those that do not meet delivery standards. But for most cities, the financial stakes are modest: the median city receives a CDBG award equal to just
"CDBG funding can be a meaningful tool for local governments, particularly because communities have flexibility in how they put those dollars to work," said Joel Berner, senior economist, Realtor.com®. "But the current payout structure is unlikely to change housing policy in most large cities when the potential penalty is a tiny fraction of their overall budgets."
The analysis compares 2023 HUD grant data with Census Bureau city budget and population data, as well as Realtor.com® listing data and household-growth estimates. The nation's largest cities receive the greatest total CDBG awards, led by
Where CDBG Incentives Could Have the Largest Impact
For large cities with more than 250,000 residents, Realtor.com® identified markets where CDBG funding is comparatively important to local revenue and where the share of for-sale listings that are newly constructed is low. The 10 markets most likely to see a meaningful effect from the CDBG payout program are:
CDBG Amount | CDBG as | New | New | Household | |
1.15 % | 1.3 % | 42.1 % | 1.0 % | ||
1.10 % | 1.3 % | 321.2 % | 1.7 % | ||
1.01 % | 1.3 % | 144.5 % | -0.2 % | ||
0.87 % | 1.3 % | 49.7 % | 5.6 % | ||
1.40 % | 3.0 % | 259.3 % | 1.2 % | ||
0.79 % | 1.3 % | 142.6 % | 0.8 % | ||
1.77 % | 3.9 % | 157.2 % | 0.9 % | ||
0.70 % | 1.9 % | 21.3 % | 6.3 % | ||
1.11 % | 3.8 % | 340.9 % | -0.5 % | ||
0.94 % | 3.6 % | 187.5 % | 1.9 % | ||
National | 0.33 % | 17.9 % | 12.4 % | 1.6 % |
These markets generally have substantially lower new-construction shares than the national figure. The new-construction share of listings is
"Targeting incentives at places where homebuilding is least active could help unlock development where it is needed most," Berner said. "The key question is whether cities can reduce regulatory barriers and make it easier to build. If Congress wants this program to drive broader change, however, the financial stakes will likely need to be larger."
Four of the 10 large cities identified are growing household counts faster than the national
A Self-Funding Program With Limited Financial Leverage
The CDBG payout program is designed to be self-funding, with penalties supporting bonuses for communities that meet their housing-growth targets. Cities are exempt if they lack statutory zoning authority, have high rental vacancy rates, have low fair-market rents or have experienced a federally declared disaster within the prior 365 days.
CDBG funds have historically supported infrastructure and public facilities, housing rehabilitation and buyer assistance, economic development, and public services. Total CDBG funding has not kept pace with inflation since the program was created in 1974, while the number of eligible recipients has increased. The median grant among cities analyzed was
Read the full report: The Role of Community Development Block Grants in Modern Housing Policy
Methodology
Community Development Block Grant amounts for 2023 were sourced from HUD's Find a Grantee data. City budget data came from the
About Realtor.com®
For over 30 years, Realtor.com® has connected buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 real estate site REALTOR® agents recommend, Realtor.com® delivers consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.
Media Contact: Mallory Micetich, press@realtor.com
View original content:https://www.prnewswire.com/news-releases/community-development-grant-funds-emerge-as-housing-incentive-lever-in-new-law-realtorcom-report-finds-302843012.html
SOURCE Realtor.com