Which word best fits in the following context: "Yesterday, the government announced a $10 million increase in the town's budget to try and tackle the ____________ problem that exists."?

The word "housing" is the correct choice for this context because it refers to the broader category or system associated with the provision of homes or accommodation. In this sentence, the focus is likely on a specific issue related to homes and living conditions, which aligns with topics such as affordability, availability, or quality of housing in the town. By using "housing," the statement clearly addresses the overall problem about the need for better or increased housing resources.

The other options do not fit the context as effectively. "Household" typically pertains to matters concerning a single family or the people living together in a home, which does not capture the wider issue that the budget increase aims to address. "Houses," on the other hand, refers specifically to physical structures, lacking the broader implication of the challenges surrounding the availability or suitability of living accommodations. Lastly, "housed" is a past participle form that typically doesn’t work as a noun in this context, failing to convey the problem requiring attention. Hence, "housing" is the most suitable choice to encapsulate the issue being discussed.