Older industrial cities across the Midwest and Northeast stand to gain the most from a new federal law tying Community Development Block Grant funding to local homebuilding, according to a Realtor.com report released Aug. 5.
The report examines the 21st Century ROAD to Housing Act, which ties local CDBG allocations to housing growth β rewarding communities that expand their housing stock with larger grants while reducing awards, by as much as 10%, for those that fall short of delivery standards. Realtor.com found the incentive is likely to matter most in smaller, post-industrial markets where CDBG dollars represent a larger share of local budgets and housing production has lagged.
Milwaukee, Detroit top the list
Among large markets, Realtor.com identified Milwaukee, Detroit, Toledo, Newark, Cleveland, Buffalo, Pittsburgh, Jersey City, St. Louis and Minneapolis as the top 10 cities positioned to benefit most from the new incentive structure. The national median CDBG award is $839,525, though the largest cities receive far more: New York City’s allocation is $169.3 million, Chicago’s is $75.1 million and Los Angeles’s is $50.2 million. The report estimated the median potential penalty for underperforming communities at roughly $84,000.
“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 at Realtor.com.
Realtor.com based its findings on 2023 HUD grant data, U.S. Census Bureau city budgets and population statistics, Realtor.com’s own listing data using a 12-month trailing average through June 2026, and household-growth estimates from Claritas covering 2025 and 2026.
CDBG remains one of the largest sources of flexible federal funding available to local governments, and cities have wide discretion in how they deploy it β toward infrastructure, affordable housing development, public services or economic development projects. Tying a portion of that flexibility to housing production marks a shift from CDBG’s traditional role as a general-purpose community development tool toward a more targeted lever aimed specifically at boosting housing supply, part of a broader push in the ROAD to Housing Act that also includes a new zoning-reform innovation fund and expanded CDBG eligibility for new construction projects.
What it means
The city-level grant figures and top-10 ranking are Realtor.com’s own analysis, built on public HUD and Census data combined with the company’s proprietary listing data β a Class 2 source that is authoritative for Realtor.com’s own methodology but represents one organization’s interpretation of which markets will respond most to the incentive. The underlying law itself, which became effective under a multi-year phase-in beginning in fiscal 2029, is a matter of public record. Whether the financial incentive is large enough to meaningfully change local zoning and permitting behavior β the actual levers that determine whether homes get built β remains uncertain, and Realtor.com’s report addresses which cities have the most to gain rather than whether they will act on that incentive.
What to watch: whether cities identified as top beneficiaries, many of which have struggled with population loss and aging housing stock for decades, use the CDBG incentive to meaningfully ease local barriers to construction, or whether the relatively modest dollar amounts involved prove too small to shift entrenched local politics around zoning and development approval.
