[Federal Register Volume 90, Number 161 (Friday, August 22, 2025)]
[Notices]
[Pages 41096-41102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-16060]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6553-N-01]
Fair Market Rents for the Housing Choice Voucher Program,
Moderate Rehabilitation Single Room Occupancy Program, and Other
Programs Fiscal Year 2026
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, Department of Housing and Urban Development, HUD.
ACTION: Notice of Fiscal Year (FY) 2026 Fair Market Rents (FMRs).
-----------------------------------------------------------------------
SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
(USHA), as amended by the Housing Opportunity Through Modernization Act
of 2016 (HOTMA), requires the Secretary to publish FMRs not less than
annually, adjusted to be effective on October 1 of each year. This
notice describes the methods used to calculate the FY 2026 FMRs and
lists the procedures for Public Housing Agencies (PHAs) to request
reevaluations of their FMRs as required by HOTMA.
DATES: Comments are due by: September 22, 2025.
Effective Date: October 1, 2025, unless HUD receives a valid
request for reevaluation of specific area FMRs as described below.
ADDRESSES: HUD invites interested persons to submit comments regarding
the FMRs and to request reevaluation of the FY 2026 FMRs.
Communications must refer to the above docket number and title and
should contain the information specified in the ``Request for Public
Comments and FMR Reevaluations'' section. There are two methods for
submitting public comments or reevaluation requests:
1. Electronic Submission of Comments
Interested persons may submit comments or reevaluation requests
electronically through the Federal eRulemaking Portal at https://www.regulations.gov. HUD strongly encourages commenters to submit
comments or reevaluation requests electronically. Electronic submission
of comments or reevaluation requests allows the author maximum time to
prepare and submit a comment or reevaluation request, ensures timely
receipt by HUD, and enables HUD to make them immediately available to
the public. Comments submitted electronically through the https://www.regulations.gov website can be viewed by other submitters and
interested members of the public. Commenters or reevaluation requestors
should follow the instructions provided on that site to submit comments
or reevaluation requests electronically.
2. Submission of Comments by Mail
Members of the public may submit comments or requests for
reevaluation by mail to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 7th Street
SW, Room 10276, Washington, DC 20410-0500.
Note: To receive consideration as public comments or reevaluation
requests, comments or requests must be submitted through one of the two
methods specified above. Again, all submissions must refer to the
docket number and title of the notice.
No Facsimile Comments or Reevaluation Requests. HUD does not accept
facsimile (FAX) comments or requests for FMR reevaluation.
FOR FURTHER INFORMATION CONTACT: Adam Bibler, Office of Policy
Development and Research, Room 8208, U.S. Department of Housing and
Urban Development, 451 Seventh Street SW, Washington, DC 20410;
telephone (202) 402-6057 (this is not a toll-free number).
For technical information on the methodology used to develop FMRs
or a listing of all FMRs, please call the HUD User information line at
800-245-2691 or access the information on the HUD User website at
https://www.huduser.gov/portal/datasets/fmr.html. HUD welcomes and is
prepared to receive calls from individuals who are deaf or hard of
hearing, as well as from individuals with speech or communication
disabilities. To learn more about how to make an accessible telephone
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
Questions related to the use of FMRs or voucher payment standards
should be directed to the respective local HUD program staff or the
Office of Public and Indian Housing Customer Service Center at https://www.hud.gov/program_offices/public_indian_housing/about/css. Questions
on how to conduct FMR surveys may be addressed to the electronic
mailbox for the Program Parameters and Research Division at
[email protected].
Electronic Data Availability
This Federal Register notice will be available electronically from
the HUD User page at https://www.huduser.gov/portal/datasets/fmr.html.
Federal
[[Page 41097]]
Register notices also are available electronically from https://www.federalregister.gov/, the U.S. Government Publishing Office
website. Complete documentation of the methodology and data used to
compute each area's FY 2026 FMRs is available at https://www.huduser.gov/portal/datasets/fmr.html#2026_query. FY 2026 FMRs are
available in a variety of electronic formats at https://www.huduser.gov/portal/datasets/fmr.html, including in PDF and
Microsoft Excel. Small Area FMRs for all metropolitan and
nonmetropolitan areas are available in Microsoft Excel format at:
https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html. For
informational purposes, HUD also publishes 50th percentile rents for
all FMR areas at https://www.huduser.gov/portal/datasets/50per.html.
SUPPLEMENTARY INFORMATION:
I. Background
Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing
assistance to aid low-income families in renting safe and decent
housing. Housing assistance payments are limited by FMRs established by
HUD for different geographic areas. In the Housing Choice Voucher (HCV)
program, the FMR is the basis for determining the ``payment standard
amount'' used to calculate the maximum monthly subsidy for an assisted
family. See 24 CFR 982.503. In addition, the year-over-year FMR change
is one measure of rent inflation used to calculate the Renewal Funding
Inflation Factors that affect PHAs' Housing Choice Voucher funding
eligibility for the calendar year. HUD also uses the FMRs to determine
initial renewal rents for some expiring project-based Section 8
contracts, initial rents for housing assistance payment contracts in
the Moderate Rehabilitation Single Room Occupancy program, rent
ceilings for rental units in both the HOME Investment Partnerships
program and the Emergency Solution Grants program, calculation of
maximum award amounts for Continuum of Care recipients and the maximum
amount of rent a recipient may pay for property leased with Continuum
of Care funds, and calculation of flat rents in Public Housing units.
The FMR is also used to determine the Performance Based Contract
Administration Fee in Multifamily Housing. In general, the FMR for an
area is the amount that a tenant would need to pay the gross rent
(shelter rent plus utilities) of privately owned, decent, and safe
rental housing of a modest (non-luxury) nature with suitable amenities.
HUD's FMR calculations represent HUD's best effort to estimate the 40th
percentile gross rent paid by recent movers into standard quality units
in each FMR area. In addition, all rents subsidized under the HCV
program must meet reasonable rent standards.
HUD's methodology for calculation FMRs is described in Section III.
HUD first adopted this methodology for the calculation of FY 2024 FMRs,
and it is unchanged for FY 2026.
II. Publication of FMRs
Section 8(c)(1) of the USHA,\1\ as amended by HOTMA (Pub. L. 114-
201, enacted July 29, 2016), requires the Secretary of HUD to publish
FMRs not less than annually. Section 8(c)(1)(A) states that each FMR
``shall be adjusted to be effective on October 1 of each year to
reflect changes, based on the most recent available data trended so the
rentals will be current for the year to which they apply. . . .''
Section 8(c)(1)(B) requires that HUD publish, not less than annually,
new FMRs on the World Wide Web or in any other manner specified by the
Secretary, and that HUD must also notify the public of when it
publishes FMRs by Federal Register notice. After notification, the FMRs
``shall become effective no earlier than 30 days after the date of such
publication,'' and HUD must provide a procedure for the public to
comment and request a reevaluation of the FMRs in a jurisdiction before
the FMRs become effective. Consistent with the statute, HUD is issuing
this notice to notify the public that FY 2026 FMRs are available at
https://www.huduser.gov/portal/datasets/fmr.html and will become
effective on October 1, 2025. This notice also provides procedures for
FMR reevaluation requests.
---------------------------------------------------------------------------
\1\ 42 U.S.C. 1437f.
---------------------------------------------------------------------------
III. FMR Methodology
This section provides a brief overview of how HUD computed the FY
2026 FMRs. For complete information on how HUD derives each area's
FMRs, see the online documentation at https://www.huduser.gov/portal/datasets/fmr.html#2026_query.
A. Geographic Area Definitions
The FY 2026 FMRs are based on the updated metropolitan statistical
area (MSA) definitions published by the Office of Management and Budget
(OMB) on July 21, 2023, and newly incorporated by the Census Bureau
into the 2023 American Community Survey (ACS) data. However, in many
cases, HUD has split metropolitan statistical areas into smaller
subareas, which HUD designates as ``HUD Metropolitan Fair Market Rent
Areas (HMFAs).'' This is meant to minimize volatility in the year to
year change in FMRs based on geographic revisions, and to tailor FMRs
to local housing markets.
Since FY 2016, HUD's process for determining HMFA boundaries
following revisions by OMB has been as follows:
When a county is newly added to an existing metropolitan area,
the county is instead treated as a single-county HMFA, and its
metropolitan area is labeled as a HMFA.
When a county is removed from an area, the area becomes a
single non-metropolitan county, and is removed from its prior FMR area.
When multiple counties are grouped into a new metropolitan
area, they are instead treated as separate, single-county HMFAs.
When a county switches metropolitan areas, it is instead
treated as a single-county HMFA and its new metropolitan area is
labeled as a HMFA.
HUD maintains FMR area boundaries in the six New England
states that are based on groupings of towns rather than counties,
following the metropolitan area definitions used prior to 2003.
HUD has maintained these criteria for FY 2026 FMRs. However, there
are two exceptions. First, the state of Connecticut has officially
changed its county-equivalent geographic units from legacy counties
with no active government functions to planning regions. The 2023 OMB
MSA definitions are based on these planning regions. Because the
planning regions do not match the boundaries of the former counties,
HUD must adopt the new MSA definitions for Connecticut rather than
maintaining its previous HMFA definitions. Second, HUD does not
designate single-municipio areas in Puerto Rico in cases where a
municipio is added, removed, or switched metropolitan areas.
Because of the limit on FMR decreases described at the end of
Section III, towns or municipios that have switched or are otherwise
newly added to MSAs in Connecticut and Puerto Rico may end up with
different FMRs than other towns or municipios within the same MSA. In
these cases, HUD has retitled the affected areas as ``Exception Areas''
using the name of the town or municipio and will maintain these
designations until the FMRs for the affected areas converge with the
rest of the MSA.
[[Page 41098]]
B. Base Year Rents
For FY 2026 FMRs, HUD uses the U.S. Census Bureau's 5-year ACS data
collected between 2019 and 2023 as the ``base rents'' for the FMR
calculations. These data are the most current ACS data available at the
time that HUD calculates the FY 2026 FMRs. HUD pairs a ``margin of
error'' test \2\ with an additional requirement based on the number of
survey observations supporting the estimate to improve the statistical
reliability of the ACS data used in the FMR calculations. The Census
Bureau does not provide HUD with an exact count of the number of
observations supporting the ACS estimate; rather, the Bureau provides
HUD with categories of the number of survey responses underlying the
estimate, including whether the estimate is based on more than 100
observations. Using these categories, HUD requires that, in addition to
meeting the ``margin of error'' test, ACS rent estimates must be based
on at least 100 observations to be used as base rents.
---------------------------------------------------------------------------
\2\ HUD's margin of error test requires that the margin of error
of the ACS estimate is less than half the size of the estimate
itself.
---------------------------------------------------------------------------
For areas in which the 5-year ACS data for two-bedroom, standard
quality \3\ gross rents do not pass the statistical reliability tests
(i.e., have a margin of error ratio greater than 50 percent or fewer
than 100 observations), HUD uses an average of the base rents over the
three most recent years \4\ (provided that there is data available for
at least two of these years),\5\ or if such data are not available,
using the two-bedroom rent data within the next largest geographic
area. For a metropolitan subarea, the next largest area is its
containing metropolitan area. For a non-metropolitan area, the next
largest area is the state non-metropolitan portion.
---------------------------------------------------------------------------
\3\ The definition of a standard quality unit is one with
complete plumbing and kitchen facilities; meals not included in
rent; and situated on ten acres or less of land. HUD no longer
excludes new construction units from the standard quality universe
pursuant to the amended regulations at 24 CFR 888.113.
\4\ For FY 2026, the three years of ACS data in question are
2021, 2022 and 2023. HUD adjusts the 2021 and 2022 data to be
denominated in 2022 dollars using the growth in Consumer Price Index
(CPI)-based gross rents measured between those years and 2023.
\5\ To be used in the three-year average calculation, the 5-year
estimates must be minimally statistically qualified; that is, the
margin of error of the estimates must be less than half the size of
the estimate.
---------------------------------------------------------------------------
C. Recent-Mover Factors
Following the assignment of the standard quality two-bedroom rent
described above, HUD applies a recent-mover factor to these rents. HUD
calculates the recent-mover factor as the change between the 5-year
2019-2023 standard quality two-bedroom gross rent and the 1-year 2023
recent mover gross rent for the recent mover factor area. HUD does not
allow recent-mover factors to lower the standard quality base rent;
therefore, if the 5-year standard quality rent is larger than the
comparable 1-year recent mover rent, HUD sets the recent-mover factor
to 1. When the recent-mover factor is greater than one and calculated
for the same geographic area as the base rent, HUD is, in effect,
replacing the base rent with the recent-mover rent for that area.
In determining the recent mover factor, HUD first considers the
rents of households who moved into their unit only in the current ACS
year. For ACS 2023, this means that the maximum length of time for a
household to have lived in its current unit and still be considered a
recent mover under this definition would be 11 months. HUD applies the
same two statistical reliability checks to each ACS recent mover
estimate as it does for the base rent estimate. First, the estimate
must be supported by at least 100 sample cases from the ACS. Second,
the estimate must have a margin of error that is smaller than half the
estimate itself. HUD first considers the estimate for two-bedroom
units, then for units of all bedroom counts. For areas without an ACS
estimate meeting these criteria, HUD next checks the estimate tabulated
from two-year recent movers. If the local two-year recent mover
estimates are not reliable, HUD considers the estimates for
increasingly larger areas of geography.
D. Other Rent Survey Data
HUD calculates base rents for the insular areas using data
collected during the 2020 decennial census of American Samoa, the
Northern Mariana Islands, and the U.S. Virgin Islands.\6\ HUD updates
the 2020 base year data to 2023 using the growth in national ACS data
over that period.
---------------------------------------------------------------------------
\6\ The ACS is not conducted in the Pacific Islands (Guam,
Northern Mariana Islands and American Samoa) or the U.S. Virgin
Islands. As part of the 2020 Decennial Census, the Census Bureau
conducted ``long-form'' sample surveys for these areas. HUD uses the
results gathered by this long form survey for the FY 2026 FMRs.
---------------------------------------------------------------------------
HUD does not use ACS data to establish the base rent or recent-
mover factor in cases where it has locally collected survey data which
are more recent than the 2023 ACS. For larger metropolitan areas that
have valid ACS one-year recent-mover data, survey data may not be any
older than the mid-point of the calendar year for the ACS one-year
data. Since the ACS one-year data used for the FY 2026 FMRs is from
2023, in larger areas with valid one-year recent mover data HUD does
not use other survey data collected before June 30, 2023 for the FY
2026 FMRs. In areas without statistically reliable 1-year ACS data, HUD
continues to use local survey data until the mid-point of the 5-year
ACS data is more recent than the local survey. For FY 2026 FMRs, the
following are Metropolitan Statistical Areas (MSAs), HUD Metro FMR
Areas, or non-metropolitan counties that have FMRs based on local ad
hoc surveys collected prior to 2024:
(1) HUD uses survey data from 2021 to calculate the FMRs for Iron
County, UT; and Transylvania County, NC.
(2) HUD uses survey data from 2022 to calculate the FMRs for Hawaii
County, HI; Hood River County, OR; and Wasco County, OR.
(3) HUD uses survey data from 2023 to calculate the FMRs for Santa
Cruz-Watsonville, CA MSA.
(4) HUD uses survey data from 2024 for Boston-Cambridge-Quincy, MA-
NH HUD Metro FMR Area; New York, NY HUD Metro FMR Area; San Luis
Obispo-Paso Robles-Arroyo Grande, CA MSA; Santa Maria-Santa Barbara, CA
MSA; Santa Rosa, CA MSA; and all areas in the state of Montana.
(5) HUD uses survey data from 2025 for Kahului-Wailuku-Lahaina, HI
HUD Metro FMR Area; and San Benito County, CA HUD Metro FMR Area.
E. Gross Rent Inflation Factors
The ACS recent mover rent estimates as described above produce a
rent value that is ``as of'' 2023. To account for inflation, HUD
adjusts this value using an inflation factor that captures rent growth
from 2023 to 2024. HUD uses a local measure of private rent inflation
for markets that are covered by at least three of the six available
sources of private rent data. HUD combines this local measure of rent
inflation with either the local metropolitan area Consumer Price Index
(CPI) rent of primary residence for the 23 areas where such data exist,
or the regional CPI rent in areas without a local index.
HUD uses both private data and the CPI in an attempt to fully and
accurately measure recent mover rent inflation. Research has shown that
private data often provide a timelier measure of recent mover rent
inflation than the CPI, which is constructed by measuring the rents of
both in-place and new tenants. However, the CPI provides other
advantages as a measure of rent inflation, such as consisting of a
representative sample of all housing
[[Page 41099]]
units, measuring rent in the same units over time (a ``repeat rent''
sample), and adjusting for the aging of units.
The private measures of rent used by HUD are the Apartment List
Rent Estimate, CoStar Group average effective rent, Cotality, Inc.,
single-family combined 3-bedroom median rent, Moody's average market
rent, RealPage average effective rent per unit, and Zillow Observed
Rent Index. In calculating a measure of inflation from these data, HUD
first takes the annual average of each statistic, then its year-to-year
change. HUD then takes the mean of the changes from all available
sources for each area.
Next, HUD takes an average of this private-sector measure of rent
inflation with rent inflation as captured by the CPI for the area,
where the private-sector measure is weighted at approximately 64
percent and the CPI rent inflation measure is weighted at approximately
36 percent. HUD has determined and updated these weights by comparing
the national average of the private rent changes and changes in CPI
rent of primary residence to changes in the national average of recent
mover rent changes from the ACS from 2018 through 2023. HUD weights the
private data averages and overall CPI rent of primary residence in such
a way as to minimize the root mean squared error between the resulting
average and the complete history of ACS recent mover rent changes.
For areas without at least three of the six private rent data
sources available, HUD uses a regional average of private rent
inflation factors alongside the regional CPI rent of primary residence
using the nationally derived weights described above. HUD constructs
the regional average by taking the rental unit weighted average of the
change in rents of each area in a region that does have private rent
data coverage. This ensures that smaller areas which are not covered by
the private sources directly still have current rental market
conditions taken into account in the calculation of the rent inflation
factor for such areas.
Finally, HUD averages the result of this step with the year-to-year
change in the CPI housing fuels and utilities series for the area to
make the resulting inflation measure reflective of gross rents. The
results of this step are gross rent estimates that are ``as of'' 2024.
F. Trend Factor Forecasts
Following the application of the appropriate gross rent inflation
factor, HUD trends the gross rent estimate from 2024 to FY 2026 using a
trend factor which is based on local or regional forecasts of CPI gross
rent data. HUD derived a trend factor for each Class A CPI area and
Class B/C CPI region using time series models based on national inputs
(National Input Model or NIM), local inputs (Local Input Model or LIM),
and historical values of the predicted series (Pure Time Series--PTS).
HUD chose the actual model used for each CPI area's trend factor based
on which model generates the lowest Root Mean Square Error statistic
and applied the trend factors to the corresponding FMR areas. HUD
established the type of model for each forecast (NIM, LIM, or PTS) for
the FY 2020 FMRs. HUD had previously stated it would reassess the model
selections during the calculation of the FY 2025 FMRs. However, due to
the high degree of volatility that occurred in rental markets from
2020-2023, HUD believes that evaluating model performance during this
period will not result in the best long term model selection. More
details on the trend factor forecasts are available in the June 5, 2019
Federal Register notice (84 FR 26141) and are available at https://www.federalregister.gov/documents/2019/06/05/2019-11763/proposed-changes-to-the-methodology-used-for-estimating-fair-market-rents.
G. Bedroom Rent Adjustments
HUD uses two-bedroom units for its primary calculation of FMR
estimates. This is generally the most common size of rental unit and,
therefore, the most reliable to survey and analyze. After estimating
two-bedroom FMRs, HUD calculates bedroom ratios for each FMR area,
which relate the prices of smaller and larger units to the cost of two-
bedroom units. The bedroom ratios HUD uses in the calculation of FY
2026 FMRs are calculated from three five-year ACS data series (2017-
2021, 2018-2022, and 2019-2023). HUD only uses estimates with a margin
of error ratio of less than 50 percent. If an area does not have
reliable estimates in at least two of the previous three ACS releases,
HUD uses the bedroom ratios for the area's larger parent geography.
To ensure an adequate distributional fit in these bedroom ratio
calculations for individual FMR areas, HUD establishes bedroom interval
ranges which set upper and lower limits for bedroom ratios nationwide,
based on an analysis of the range of such intervals for all areas with
large enough samples to permit accurate bedroom ratio determinations.
In the calculation of FY 2026 FMR estimates, HUD sets the bedroom
interval ranges as follows: efficiency FMRs are constrained to fall
between approximately 0.69 and 0.87 of the two-bedroom FMR; one-bedroom
FMRs must be between 0.76 and 0.91 of the two-bedroom FMR; three-
bedroom FMRs (prior to the adjustments described below) must be between
1.10 and 1.28 of the two-bedroom FMR; and four-bedroom FMRs (again,
prior to adjustment) must be between 1.23 and 1.56 of the two-bedroom
FMR. Given that these interval ranges partially overlap across unit
bedroom counts, HUD further adjusts bedroom ratios for a given FMR
area, if necessary, to ensure that higher bedroom-count units have
higher rents than lower bedroom-count units within that area.
HUD further adjusts the rents for three-bedroom and larger units to
reflect HUD's policy to set higher rents for these units.\7\ This
adjustment is intended to increase the likelihood that the largest
families, who have the most difficulty in leasing units, will be
successful in finding eligible program units. The adjustment adds 8.7
percent to the unadjusted three-bedroom FMR estimates and adds 7.7
percent to the unadjusted four-bedroom FMR estimates.
---------------------------------------------------------------------------
\7\ As mentioned above, HUD applies the interval ranges for the
three-bedroom and four-bedroom FMR ratios prior to making these
adjustments. In other words, the adjusted three- and four-bedroom
FMRs can exceed the interval ranges but the unadjusted FMRs cannot.
---------------------------------------------------------------------------
HUD derives FMRs for units with more than four bedrooms by adding
15 percent to the four-bedroom FMR for each extra bedroom. For example,
the FMR for a five-bedroom unit is 1.15 times the four-bedroom FMR, and
the FMR for a six-bedroom unit is 1.30 times the four-bedroom FMR.
Similarly, HUD derives FMRs for single-room occupancy units by
subtracting 25 percent from the zero-bedroom FMR (i.e., they are set at
0.75 times the zero-bedroom [efficiency] FMR).\8\
---------------------------------------------------------------------------
\8\ As established in the interim rules implementing the
provisions of the Quality Housing and Work Responsibility Act of
1998 (Title V of the FY 1999 HUD Appropriations Act; Pub. L. 105-
276) in 24 CFR 982.604.
---------------------------------------------------------------------------
H. Minimum FMRs
All FMRs are subject to a minimum rent based on state or national
non-metropolitan area median rent. HUD calculates a population-weighted
median two-bedroom FMR across all non-metropolitan counties or county-
equivalents of each state, which, for the purposes of FMRs, is the
state minimum rent. State-minimum rents for each FMR area are available
in the FY 2026 FMR Documentation System, available at https://www.huduser.gov/portal/datasets/fmr.html#2026_query. HUD also
calculates the population weighted median FMR rent across all non-
metropolitan areas of the country,
[[Page 41100]]
which, for the purposes of FMRs, is the national non-metropolitan rent.
For FY 2026, the national non-metropolitan rent is $973. The applicable
minimum rent for a particular area is the lower of the state or
national non-metropolitan median. Each area's two-bedroom FMR must be
no less than the applicable minimum rent.
I. Limit on FMR Decreases
HUD's regulations at 24 CFR 888.113 include a limit on the amount
that FMRs may annually decrease. The current year's FMRs resulting from
the application of the bedroom ratios, as discussed in Section (E)
above, may be no less than 90 percent of the prior year's FMRs for
units with the same number of bedrooms. Accordingly, if the current
year's FMRs are less than 90 percent of the prior year's FMRs as
calculated by the above methodology, HUD sets the current year's FMRs
equal to 90 percent of the prior year's FMRs. For areas where HUD has
required the use of Small Area FMRs in the administration of their
voucher programs, the FY 2026 Small Area FMRs may be no less than 90
percent of the FY 2025 Small Area FMRs. For all other metropolitan
areas, the FY 2026 Small Area FMRs may be no less than 90 percent of
the greater of the FY 2025 metropolitan area wide FMRs or the
applicable FY 2025 Small Area FMR.
PHAs operating in areas where the calculated FMR is lower than the
published FMR (i.e., those areas where HUD has limited the decrease in
the annual change in the FMR to 10 percent) may request payment
standards below the basic range (24 CFR 982.503(d)) and reference the
``unfloored'' rents (i.e., the unfinalized FMRs calculated by HUD prior
to application of the 10-percent-decrease limit) depicted in the FY
2026 FMR Documentation System (available at: https://www.huduser.gov/portal/datasets/fmr.html#2026_query).
IV. Small Area FMRs
A. SAFMR Methodology
The methodology for calculating SAFMRs is unchanged from FY 2025.
First, HUD calculates Small Area FMRs directly from the standard
quality gross rents provided to HUD by the Census Bureau for ZIP Code
Tabulation Areas (ZCTAs) when such data are statistically reliable. The
ZCTA two-bedroom equivalent 40th percentile gross rent is analogous to
the standard quality base rents set for metropolitan areas and non-
metropolitan counties. For each ZCTA with statistically reliable gross
rent estimates, using the expanded test of statistical reliability
first used in FY 2018 (i.e., estimates with margins of error ratios
below 50 percent and based on at least 100 observations), HUD
calculates a two-bedroom equivalent 40th percentile gross rent using
the first statistically reliable gross rent distribution data from the
following data sets (in this order): two-bedroom gross rents, one-
bedroom gross rents, and three-bedroom gross rents. If either the one-
bedroom or three-bedroom gross rent data are used because the two-
bedroom gross rent data are not statistically reliable, HUD converts
the one-bedroom or three-bedroom 40th percentile gross rent to a two-
bedroom equivalent rent using the bedroom ratios for the ZCTA's parent
metropolitan or non-metropolitan area. To increase stability to these
Small Area FMR estimates, HUD averages the latest three years of gross
rent estimates.\9\
---------------------------------------------------------------------------
\9\ For example, for FY 2026 Small Area FMRs, HUD averages the
gross rents from 2021, 2022, and 2023 5-Year ACS estimates. The 2021
and 2022 gross rent estimates are adjusted to 2023 dollars using the
metropolitan area's gross rent CPI adjustment factors.
---------------------------------------------------------------------------
For ZCTAs without usable gross rent data by bedroom count, HUD
calculates Small Area FMRs using the rent ratio method. To calculate
Small Area FMRs using a rent ratio, HUD divides the median gross rent
across all bedrooms for the ZCTA by the similar median gross rent for
the metropolitan or non-metropolitan area of the ZCTA. If a ZCTA does
not have reliable rent data at the all-bedroom level, HUD will then
check to see if the ZCTA borders other ZCTAs that themselves have
reliable rent data. If at least half of a ZCTA's ``neighbors'' have
such data, HUD will use the weighted average of those estimates as the
basis for the Small Area FMR rather than a county proxy, where the
weight is the length of the shared boundary between the ZCTA and its
neighbor. In small areas where the neighboring ZCTA median gross rents
are not statistically reliable, HUD substitutes the median gross rent
for the county containing the ZIP code in the numerator of the rent
ratio calculation. HUD multiplies this rent ratio by the current two-
bedroom FMR for the metropolitan or non-metropolitan area containing
the small area to generate the current year two-bedroom FMR for the
small area.
HUD continues to use a rolling average of ACS data in calculating
the Small Area FMR rent ratios. HUD believes coupling the most current
data with previous year's data minimizes excessive year-to-year
variability in Small Area FMR rent ratios due to sampling variance.
Therefore, for FY 2026 Small Area FMRs, HUD has updated the rent ratios
to use an average of the rent ratios calculated from the 2017-2021,
2018-2022, and 2019-2023 5-year ACS estimates.
HUD limits each two-bedroom Small Area FMR to be no more than 150
percent of the two-bedroom FMR for the metropolitan or non-metropolitan
area where the ZIP code is located.
B. SAFMR Mandatory Use
On November 16, 2016, HUD published a final rule entitled
``Establishing a More Effective Fair Market Rent (FMR) System; Using
Small Area Fair Market Rents (Small Area FMRs) in Housing Choice
Voucher Program Instead of the Current 50th Percentile FMRs'' (81 FR
80567) (``final rule'' or ``Small Area FMRs final rule''). Based on
that rule, HUD has required public housing agencies (PHAs) operating in
certain metropolitan areas to use Small Area Fair Market Rents in
determining payment standards used in the housing choice voucher
program. For FY 2026 FMRs, the implementation of new metropolitan
statistical area definitions as described in Section III has resulted
in changes to the boundaries of two mandatory SAFMR areas. First,
Calvert County, MD has been removed from the Washington-Arlington-
Alexandria, DC-VA-MD HUD Metro FMR Area. Second, the towns of Bristol,
Burlington, Hartland, and Union have been removed from Hartford-West
Hartford-East Hartford, CT HUD Metro FMR Area. In both instances, PHAs
operating in the county or towns removed remain required to use SAFMRs.
Additionally, the towns of Clinton, Deep River, Essex, Killingworth,
Lyme, Old Lyme, Old Saybrook and Westbrook have been newly added to the
Hartford-West Hartford-East Hartford, CT MSA. HUD has examined data for
the revised Hartford MSA and found that it would still meet the
selection criteria of the Small Area FMRs final rule. Therefore, PHAs
operating within these towns newly added to the Hartford-West Hartford-
East Hartford, CT MSA must have their payment standards aligned with
the Small Area FMRs in their operating areas by January 1, 2027. This
timeframe is consistent with the implementation period provided to the
newly identified mandatory areas announced in the October 25, 2023
Federal Register notice ``Small Area Fair Market Rents in the Housing
Choice Voucher Program Metropolitan Areas Subject to Small Area Fair
Market Rents'' (88 FR 73352).
[[Page 41101]]
V. Notice of Proposed Material Changes for FY 2027 FMRs
As previously stated, HUD uses the CPI housing fuels and utilities
series in its calculation of the gross rent inflation factor. In
November 2024, the Bureau of Labor Statistics announced it would
discontinue CPI fuels and utilities data at the metropolitan area and
regional levels starting January 2025, affecting HUD's ability to
inflate ACS gross rents for FY 2027 FMRs which would rely on the 2024
to 2025 increase in the index.
To address this, HUD proposes using an alternative utility
inflation factor based on a weighted average composite of four separate
household fuel and utility components: electricity, natural gas, fuel
oil, and water/sewer/trash. The measure is designed to approximate the
CPI-based utility index for each of the 23 self-representing Primary
Sampling Units (PSUs) in the CPI sample, as well as the four Class B/C
Census regions.
HUD proposes using state-level data from the U.S. Energy
Information Administration (EIA) surveys for residential electricity,
natural gas, and fuel oil prices, along with national-level data on
changes in residential water, sewer, and trash collection costs from
the U.S. Bureau of Labor Statistics (BLS). Because EIA data is
primarily available at the state level, HUD assigns state-level prices
to each PSU based on the state in which the PSU is located, assuming
uniform pricing behavior across Core-Based Statistical Areas (CBSAs)
within the state. For PSUs that span multiple states, HUD assigns a
utility price based on a population-weighted average of the relevant
state-level utility prices, using the population of each county within
the PSU as weights. For example, the Washington-Arlington-Alexandria,
DC-VA-MD-WV PSU spans three states and the District of Columbia and
includes 25 counties; HUD calculates a weighted average utility price
for each component using population data from these counties.
Similarly, for the Class B/C Census regions, HUD computes a population-
weighted average utility price across all non-self-representing PSU
areas, consistent with the BLS approach to constructing the regional
CPI for Class B/C areas.
Once each PSU and Census region is assigned a utility price series,
HUD would calculate the year-over-year change in each of the four
utility components. These changes are then combined into a composite
utility inflation factor using national CPI-U relative importance
weights from the household fuels and utilities (SAH2) series. This
composite utility factor would replace the current utility factor in
the calculation of the gross rent inflation factors and trend factor
forecasts as described in Section III, subsections E and F.
HUD has calculated hypothetical utility inflation factors based on
this proposed methodology. Using these factors, HUD has also calculated
hypothetical FY 2026 FMRs and compared them to the actual FY 2026 FMRs
in order to assess the impact and accuracy of the proposed alternate
methodology. The average absolute difference between the two sets of
FMRs is less than $5. The maximum increase in any area's two-bedroom
FMR is $38, and the maximum decrease is $27. HUD is publishing these
alternate FMRs on https://www.huduser.gov/portal/datasets/fmr.html#data_2026 so stakeholders can assess the impact of this
proposal.
VI. Request for Public Comments and FMR Reevaluations
HUD accepts public comments on the methods HUD uses to calculate FY
2026 FMRs and requests for reevaluation of FMRs for specific areas for
30 days after the publication of this notice. HUD lacks the resources
to conduct local surveys of rents to address comments filed regarding
the FMR levels for specific areas. PHAs may continue to fund such
surveys independently, as specified below, using ongoing administrative
fees or their administrative fee reserve if they so choose. HUD
continually strives to calculate FMRs that meet the statutory
requirement of using ``the most recent available data'' while also
serving as an effective program parameter.
In response to this notice, HUD specifically requests comment on
the alternate utility inflation factor methodology intended for FY 2027
FMRs described in Section V. Additionally, as described in Section I,
HUD has now updated FMR area boundaries in Connecticut to match the
latest MSA definitions. HUD requests comment as to whether areas in the
remaining five New England states should be updated to base FMR areas
on county-based CBSAs for FY 2027 FMRs. HUD notes that maintaining the
old boundaries in the interest of preserving local housing market
variation in FMRs may no longer be necessary with the availability of
Small Area FMRs, which did not exist when HUD elected to maintain the
existing New England boundaries.
A. FMR Reevaluations
42 U.S.C. 1437f(c)(1)(B) includes the following: ``The Secretary
shall establish a procedure for public housing agencies and other
interested parties to comment on such fair market rentals and to
request, within a time specified by the Secretary, reevaluation of the
fair market rentals in a jurisdiction before such rentals become
effective.''
Typically, PHAs request a reevaluation of FMRs solely to ensure
that they can establish adequate payment standards. HUD reminds PHAs
that FMRs are also an underlying component of their annual HCV Renewal
Funding Inflation Factors (RFIFs), and potential concerns regarding the
adequacy of the RFIF are an important consideration when determining
whether to request an FMR Re-evaluation.
PHAs or other parties interested in requesting HUD's reevaluation
of their area's FY 2026 FMRs, as provided for under section 8(c)(1)(B)
of USHA, must follow the following procedures:
(1) By the end of the 30-day comment period, PHAs or other parties
must submit reevaluation requests through https://www.regulations.gov/
or directly to HUD as described in the ADDRESSES section above. The
area's PHA or, in multi-jurisdictional areas, PHA(s) representing at
least half of the voucher tenants in the FMR area, must agree that the
reevaluation is necessary.
(2) The requestor(s) must supply HUD with data more recent than the
2023 ACS data used in the calculation of the FY 2026 FMRs. HUD requires
data on gross rents paid in the FMR area for occupied standard quality
rental housing units. Occupied recent mover units (defined as those who
moved in the past 24 months, although a shorter definition may also be
used at the requestor's discretion) provide the best data. The data
delivered must be sufficient for HUD to calculate a 40th percentile
two-bedroom gross rent. Should this type of data not be available,
requestors may gather this information using the survey guidance
available at https://www.huduser.gov/portal/datasets/fmr/NoteRevisedAreaSurveyProcedures.pdf and https://www.huduser.gov/portal/datasets/fmr/PrinciplesforPHA-ConductedAreaRentSurveys.pdf.
(3) Areas where valid reevaluation requests are submitted may
continue to use FY 2025 FMRs or may use the FY 2026 FMRs. Commenters
should indicate whether they wish to maintain the FY 2025 or implement
the FY 2026 FMR during the revaluation period as part of their
reevaluation request. PHAs requesting reevaluation in areas newly
designated as SAFMR areas must adopt SAFMRs, but they may be the FY
2025 SAFMRs or FY 2026 SAFMRs during
[[Page 41102]]
the reevaluation period. Following the comment period, HUD will post a
list, at https://www.huduser.gov/portal/datasets/fmr.html, of the areas
requesting reevaluations where FY 2025 FMRs remain in effect.
(4) PHAs or other parties must supply data for reevaluations to HUD
no later than Friday, January 9, 2026. All survey responses of rental
units gathered as part of the survey efforts should be delivered to HUD
via email. As in FY 2025, HUD requests that survey responses include
the ZIP Code or comparable small-area identifier (such as Census tract)
of the housing unit. In addition to the survey data, HUD requires a
current utility schedule to evaluate the survey responses. Finally, HUD
encourages PHAs to evaluate their survey data to ensure the survey
supports their request. Should PHAs or their contractors undertake this
evaluation, HUD requests that this analysis also be submitted.
HUD will use the data delivered by January 9, 2026, to reevaluate
the FMRs and following the reevaluation, HUD will post revised FMRs in
April of 2026 with an accompanying Federal Register notice stating the
revised FMRs are available, which will include HUD's responses to
comments filed during the comment period for this notice. By January
16, 2026, HUD will post at https://www.huduser.gov/portal/datasets/fmr.html, a listing of the areas that requested FMR reevaluations and
continued effect of the FY2025 FMRs but did not deliver data, making
the FY 2026 FMRs effective in these areas. HUD will incorporate any
data supporting a change in FMRs supplied after January 9, 2026 into
the FY 2027 FMRs. Questions on how to conduct FMR surveys may be
addressed to the Program Parameters and Research Division at
[email protected].
For small metropolitan areas without one-year ACS data and non-
metropolitan counties, HUD has developed a method of using mail surveys
that is discussed on the FMR web page: https://www.huduser.gov/portal/datasets/fmr.html#survey_info. This method allows for a PHA to submit a
valid survey consisting of as few as 100 one-bedroom, two-bedroom, and
three-bedroom units.
Other survey methods are acceptable in providing data to support
reevaluation requests if the survey method can provide statistically
reliable, unbiased estimates of gross rents paid throughout the entire
FMR area and small area identifiers for the survey responses. In
general, recommendations for FMR changes and supporting data must
reflect the rent levels that exist within the entire FMR area and
should be statistically reliable.
PHAs in non-metropolitan areas are required to obtain 100 eligible
survey responses which means they may need a sampling frame of at least
5,000 rental units, taking into account survey non-response rates and
the fact that some units will fail to qualify. PHAs may conduct surveys
of groups of non-metropolitan counties to increase the number of rental
units that are surveyed, but HUD must approve all county-grouped
surveys in advance. HUD cautions that the resulting FMRs may not be
identical for the counties surveyed; each individual FMR area will have
a separate FMR based on the relationship of rents in that area to the
combined rents in the cluster of FMR areas. In addition, HUD advises
that in counties where FMRs are based on the combined rents in the
cluster of FMR areas, HUD will not revise their FMRs unless the grouped
survey results show a revised FMR statistically different from the
combined rent level.
Survey samples should preferably be randomly drawn from a complete
list of rental units for the FMR area. If this is not feasible, the
selected sample must be drawn to be statistically representative of the
entire rental housing stock of the FMR area. Surveys must include units
at all rent levels and be representative by structure type (including
single-family, duplex, and other small rental properties), age of
housing unit, and geographic location. The current 5-year ACS data
should be used as a means of verifying if a sample is representative of
the FMR area's rental housing stock. HUD staff are available to work
with PHAs in areas requesting re-evaluations to provide the minimum
number of survey cases required to ensure that data submitted for re-
evaluation represent a statistically valid sample. In cases where a
submitted sample is not representative, HUD may attempt to weight the
sample cases prior to calculating 40th percentile rent estimates.
A PHA or contractor that cannot obtain the recommended number of
sample responses after reasonable efforts should consult with HUD
before abandoning its survey; in such situations, HUD may find it
appropriate to relax normal sample size requirements, but in no case
will fewer than 100 eligible cases be considered.
VII. Environmental Impact
This notice involves the establishment of FMR schedules, which do
not constitute a development decision affecting the physical condition
of specific project areas or building sites. Accordingly, under 24 CFR
50.19(c)(6), this notice is categorically excluded from environmental
review under the National Environmental Policy Act of 1969 (42 U.S.C.
4321).
Accordingly, the Fair Market Rent schedules, which will not be
codified in 24 CFR part 888, are available at https://www.huduser.gov/portal/datasets/fmr.html.
John Gibbs,
Principal Deputy Assistant Secretary for Policy Development and
Research.
Fair Market Rents for the Housing Choice Voucher Program
Schedule B--General Explanatory Notes
Arrangement of FMR Areas and Identification of Constituent Parts
a. The Metropolitan and Non-Metropolitan FMR Area Schedule lists
FMRs alphabetically by state, by metropolitan area and by non-
metropolitan county within each state and are available at https://www.huduser.gov/portal/datasets/fmr.html.
b. The schedule lists the constituent counties (and New England
towns and cities) included in each metropolitan FMR area immediately
following the listings of the FMR dollar amounts. All constituent parts
of a metropolitan FMR area that are in more than one state can be
identified by consulting the listings for each applicable state.
c. The schedule lists two non-metropolitan counties alphabetically
on each line of the non-metropolitan county listings.
d. Similarly, the schedule lists the New England towns and cities
included in a non-metropolitan county immediately following the county
name.
[FR Doc. 2025-16060 Filed 8-21-25; 8:45 am]
BILLING CODE 4210-67-P