The nationwide count of people living on the streets fell 6.8%, while San Francisco recorded a drop of roughly 8%, the analysis found. The Alliance attributed the progress in part to shelter funding approved by Congress and by states including California.

"But it is not enough," said Ann Oliva, CEO of the National Alliance to End Homelessness. "We need to have more affordable housing and we have to close the gap between wages and rents."

Oliva pointed to a persistent shortage in California, where only 25 affordable homes are available for every 100 low-income renter households. "That gap has to be filled," she said, noting that state government is directing money toward affordable and supportive housing.

The analysis also highlighted a milestone for veterans: fewer than 30,000 veterans nationwide are now homeless, a figure the Alliance called a very positive development. In San Francisco, veteran homelessness dropped 44%.

The findings arrive just after Veterans Day and offer a measure of encouragement for Bay Area communities that have struggled with visible encampments and rising housing costs. But advocates caution that shelter alone cannot sustain the decline. Without expanding the supply of affordable homes and addressing the widening mismatch between wages and rents, they warn, the gains could erode.

Oliva said the state's investment in affordable and supportive housing is a step in the right direction, but the scale of the need remains far larger than what has been funded so far.