Studies show individuals entering sober living recovery houses (SLHs) make significant, sustained improvement on measures of substance abuse problems, employment, and arrests. The current study assessed changes in housing status among SLH residents over 18 months and the relative influences of housing status and psychiatric distress on substance abuse outcomes. Two hundred forty-one men and 58 women, all age 18 and older, were interviewed within their first week of entering 20 SLHs and again at 6-, 12-, and 18-month follow-up. Between entry into the SLHs and 18-month follow-up homelessness declined from 16% to 4%, marginal housing declined from 66% to 46%, and stable housing increased from 13% to 27%. Psychiatric severity was generally mild to moderate in severity, but nevertheless showed improvement over the 18-month study period. Multivariate models showed worse substance abuse outcomes for residents with higher psychiatric distress and unstable housing. Relative to persons with stable housing, those who were homeless or marginally housed had worse outcomes and those in SLHs had better outcomes. Overall, we conclude that individuals entering SLHs show improvement in housing status and psychiatric distress, both of which are associated with better substance abuse outcomes.