“Housing bonds” are a special category of municipal bonds, and they may provide a substantial yield advantage to investors of, say, from one-half to three-quarters of a tax-advantaged percentage point over “vanilla-type” munis. Housing bonds generally have a higher yield because they carry the risk of early and unpredictable calls, and investors need to be rewarded for taking on this risk.
Housing bonds are issued by a Housing Finance Authority to raise funds to make mortgages for large housing projects or for single-family housing. Multi-family and Single-family housing bonds have distinct differences of which you should be aware. But the key to prudent investing in these potentially attractive muni bonds is calculation up front of the effects of an early call, to be sure that the yield advantage is not eliminated by the early call.