HUD Releases Section 3 Reporting Guidance
By Eric Oberdorfer, Director of Policy & Legislative Affairs
November 26, 2025 — Recently, HUD issued Notice PIH-2025-29 titled “Reporting Supplement to the Implementation of the Final Rule on Section 3 Regulations.” The notice updates and clarifies how PHAs must report their Section 3 compliance when they receive HUD financial assistance.
Under Section 3, PHAs that receive public housing funding, along with their contractors and subcontractors, must make best efforts to provide low- and very low-income individuals with access to the training, employment, and economic opportunities generated by that funding.
PIH-2025-29 applies to PHAs receiving public housing financial assistance (Operating Fund, Capital Fund), including development work underway before converting under the Rental Assistance Demonstration (RAD) program. It does not apply to community-development or other non-public-housing federal assistance programs like HOME and CDBG, which remain subject to different Section 3 requirements under separate sub-parts of the regulation.
PHAs will be required to begin submitting Section 3 reports via the Section 3 Reporting System (S3R) starting January 1, 2026, covering their prior fiscal-year’s labor hours and compliance efforts. PHAs with a fiscal year ending Sept 30, 2025 will get a one-time submission extension lasting until March 1, 2026.
As required in the Section 3 final rule, each PHA must report total labor hours, Section 3 Worker labor hours, Targeted Section 3 Worker labor hours, and any qualitative efforts (for example, outreach, hiring strategies) made to meet Section 3 goals. “Small PHAs” (fewer than 250 public housing units) are allowed to only report qualitative efforts instead of detailed labor-hour tracking if they choose. More information on the final Section 3 rule can be found here.
PHAs should be preparing now for the January 2026 reporting start date, updating their record-keeping, labor tracking, hiring practices, and documentation. Once the S3R system is live, stakeholders may be able to review Section 3 reports to evaluate how effectively PHAs are creating jobs and opportunities for low-income and very low-income residents.