Meeting the housing needs of lower-income families is becoming a herculean task for the Department of Housing and Urban Development as it faces a dwindling supply of qualified homes.

The agency is contending with a problem that is two-fold. First, the existing affordable housing pipeline is down. New unit production also continues to decline, according to HUD deputy assistant secretary of multifamily Ben Metcalf, who spoke Tuesday at the Bipartisan Policy Center's housing conference in Ohio.

To put it into perspective, HUD lost more than 100,000 affordable housing units within 15 years time, Metcalf said.

As the demographics continue to shift, another overwhelming concern is that 43% of households are paying more than half their income in rent due to ongoing market trends such as the sequester and rising rental rates.

"It’s a cross-cutting phenomena that’s happening and we need to put a plan into place to make it better," Metcalf explained.

While there’s a lot of concern over what’s going to happen for the remainder of the fiscal year, the bigger issue is the indirect measure of what’s going to happen to the available assets in place, such as rural properties.

With a lack of investor interest and lender uncertainty, many deals remain in the pipeline, leaving the market to face the challenge of trying to create new affordable housing units.

Within HUD, voucher programs have also fallen by the wayside.

For instance, deals tied to project-based vouchers remain incomplete as public housing agencies carve back on their committments. As a result, nearly one-fourth of all housing vouchers will not take effect within the next year, Metcalf cautioned.

The housing agency has brought new tools to the table to induce private sector actors back into the market.

One of the new tools is a type of pilot program that allows lenders the chance to issue Federal Housing Administration loans.

While most don’t see FHA as the obvious insurer, HUD has launched pilot programs involving more than 70 lenders. All of the lenders are currently using FHA loans to try and entice borrowers.

Additionally, HUD is actively working to reshape its basic business model by reevaluating its inventory of housing assets.

"Now we are risk rating all our assets so we have a much better sense of which properties will go into default, so we can focus on the ones that need more attention," Metcalf noted.

Overall, Metcalf firmly believes there's hope on the horizon as Capitol Hill and Congress continue to look for innovative ways to improve the mortgage finance system, while maintaining the agency's affordable housing goals.