Social housing providers are trying to do more with less as rising expenses and threats of funding cuts butt heads with the nation’s housing crisis. 

Most public housing authorities and nonprofit developers maintained stable operating margins throughout 2025 and the first half of 2026, but they are expected to take on more debt to fund portfolio growth, according to a new report by S&P Global Ratings.

S&P’s survey of 30 social housing providers found that 86% of respondents expect either no change or a decrease in federal funding next year. About 90% are projecting rising operating costs.

Despite anticipated economic challenges, many social housing providers are on a growth mission. Fifty-four percent of survey respondents said they are considering issuing public debt over the next year, with most citing plans to buy or build housing as the primary reason. 

The majority of providers are in a stable position to do so. S&P’s median credit rating for 40 public housing agencies and 11 nonprofit developers is an A+. Unlike in grade school, an A+ isn't the highest score — it indicates “strong capacity to meet financial commitments, but it is more susceptible to adverse economic conditions” than AA or AAA borrowers, according to S&P. 

Since January 2025, S&P upgraded four social housing providers and downgraded two. 

The vast majority of social housing providers have a stable outlook. Two, the Philadelphia Housing Authority and the Housing Authority of Snohomish County in Washington state, are on track for upgrades.

Only National Core, a California nonprofit that owns approximately 10,600 units, holds a negative outlook on its A+ credit rating, indicating a chance of a future downgrade.

Between January 2025 and August 2026, 24 social housing providers tapped the public markets. Approximately $2.9B of debt was provided across 63 new issuances.

The largest activity came from issuers based in California, Texas and Washington, according to the report.

Providers have held concerns over proposed cuts and restructurings, but the sector has so far largely benefited from policy changes aimed at increasing housing production. 

The One Big Beautiful Bill Act expanded the low-income housing tax credit program, which is estimated to finance the construction of 1.2 million additional affordable rental units over the next decade.

The 21st Century Road to Housing Act added 100,000 units to the Rental Assistance Demonstration program, which allows public housing agencies to partner with private developers through Section 8 contracts. 

In August, the Department of Housing and Urban Development updated its guidance for Section 18, making it easier to reposition aging assets and tap into voucher programs. 

Still, new headwinds are looming. The House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies has proposed reducing spending for tenant-based and project-based rental assistance.

Additionally, 69% of survey respondents predicted an increase in administrative burden over the next 12 months, while 48% expect increases in regulatory oversight.

Facing pressure, some housing providers have begun tightening their belts. Providers are locking in multiyear contracts, building green to cut utility bills, conserving water through landscaping, implementing technology to reduce labor, and budgeting more conservatively in annual planning.