What specific grant conditions have federal agencies introduced since July 24, 2025 that affect state homelessness programs?

1. Limits on “Housing First” and permanent housing spending

The Executive Order and subsequent agency guidance instruct HHS and HUD to “end support” for Housing First policies that the administration says deprioritize accountability and to revise grant rules accordingly, and HUD’s November rulemaking limited how much of certain homelessness aid can be spent on permanent housing—reporting says no more than 30% of a $3 billion pool may be used for permanent housing under the new rules ^{[2] [3]}.

2. Treatment participation and civil-commitment tied to funding

Federal directions explicitly push grants toward treatment-based interventions and increased use of civil commitment; agencies were ordered to ensure discretionary SAMHSA grants fund evidence‑based prevention, treatment and recovery programs and to avoid funding programs that “fail to achieve adequate outcomes,” signaling conditions that favor programs requiring active engagement in treatment as a condition of continued funding ^{[2] [1]}.

3. Restrictions on harm‑reduction and “safe consumption” programs

The Federal Register language accompanying the Executive Order instructs HHS to make sure SAMHSA discretionary grants do not fund so‑called “harm reduction” or “safe consumption” efforts that the text characterizes as facilitating illegal drug use, effectively restricting federal support for syringe programs, supervised consumption, and similar interventions where those would be categorized as ineligible ^[2].

4. Increased performance accountability and competitive applicant pools

Agencies are directed to hold grantees to “higher standards of effectiveness in reducing homelessness and increasing public safety,” to increase competition by broadening applicant pools, and to tie awards to outcomes like public-safety metrics and treatment engagement—changes that shift grant selection away from historical prioritization of housing placement metrics toward enforcement and behavioral‑health outcomes ^{[2] [1]}.

5. Program-specific NOFO changes, deadlines and legal disruption

HUD revised Continuum of Care (CoC) NOFOs and related solicitations to reflect the administration’s priorities, imposing new conditions and deadlines; those changes have led to lawsuits from advocacy groups and states, and to a federal judge temporarily barring distribution of certain funds and a preliminary injunction affecting CoC processes, pausing enforcement of some new conditions ^{[4] [5] [6]}.

6. Differential incentives for enforcement‑oriented jurisdictions

Reporting from Stateline notes that HUD’s new funding criteria will advantage jurisdictions that criminalize public camping, expand law‑enforcement involvement, or restrict low‑barrier shelters—meaning states that adopt tougher enforcement stances may be more competitive for certain federal grants under the new rules ^[3].

7. Practical effects and concerns from providers and advocates

Advocates warn that the combined effect—restrictions on permanent housing spending, conditions favoring inpatient or mandatory treatment, and limitations on harm‑reduction—could make many current projects ineligible and risk service disruptions, with the National Alliance to End Homelessness suing over altered grant conditions and a judge granting temporary relief for some states and projects ^{[4] [5]}.

8. Uncertainties, implementation limits and competing agendas

While agencies have issued firm directives, significant implementation questions remain—how DOJ enforcement powers will be used, how Medicaid constraints like the IMD exclusion intersect with treatment requirements, and whether congressional appropriations will alter priorities—reporting and legal filings show the changes are contested and partially stayed, and the motivations behind the shift reflect an explicit federal agenda prioritizing public safety and treatment over prior housing-led consensus ^{[7] [2] [5]}.