The Department of Housing and Urban Development (HUD) annually estimates fair market rents (FMR) for standard quality rental units throughout the United States. Among other uses, FMRs help determine subsidies for almost 2 million low-income families in the nation's largest rental assistance program. However, concerns exist that FMRs can be inaccurate--often, too low, preventing program participants from finding affordable housing. Also, HUD will soon derive FMRs from a new source, the American Community Survey (ACS), which processes data somewhat differently than HUD's current data sources, including the decennial census. You asked us to review (1) how HUD estimates FMRs, (2) how accurate FMRs have been, (3) how ACS data may affect accuracy, and (4) other changes HUD can make to improve the estimates.
Recommendations for Executive Action
|Department of Housing and Urban Development||To improve the usefulness of its FMR estimates, the Secretary of HUD should ensure that HUD fully documents its method for estimating FMRs by following all of its data dissemination quality guidelines, particularly those pertaining to the transparency and reproducibility of its methodology.|
|Department of Housing and Urban Development||Although HUD did not use ACS data to update fiscal year 2006 FMRs, citing that the data were unavailable for inclusion in the 2006 FMRs, the agency now routinely uses data from the ACS to update FMRs. HUD first used ACS data to update fiscal year 2008 FMRs and more recently the agency used them to update fiscal year 2009 FMRs.|
|Department of Housing and Urban Development||To improve the usefulness of its FMR estimates, the Secretary of HUD should develop a mechanism to assess the accuracy of future FMRs, including those that are based on the ACS, in instances where HUD learns of information suggesting it needs to do so.|