The Department of Housing and Urban Development (HUD) launched the Office of Sustainable Housing and Communities (OSHC) to connect housing with job creation through new grant programs. The new HUD initiative comes as the US unemployment rate lingers near historic highs. The unemployment rate dropped slightly to 9.7% in January from recent 10% highs, according to the US Department of Labor. For employed households, finances are still pressured. According to HUD, the average family spends half of its budget on housing and transportation. The OSHC will provide grants to metropolitan planning organizations, state governments, and non-profit organizations to improve access to affordable housing and transportation options. OSHC will also invest in energy-efficient homes and buildings, while HUD puts new emphasis on its energy retrofitting financing options for single-family homes and multifamily housing through a $50m Energy Innovation fund. HUD touts the new office as the first merger between federal housing, transportation and environmental policy. The grants will be coordinated with the Department of Transportation (DOT) and the Environmental Protection Agency (EPA). Congress provided $150m to HUD for partnering with DOT and EPA to create the interagency Partnership for Sustainable Communities in June 2009. Earlier in the month, the HUD budget dropped to $41.6bn after raising annual Federal Housing Administration (FHA) insurance premiums by 50 bps to 2.25%. Write to Jon Prior.