The U.S. Census Bureau on Thursday released a list based on the 2020 Census results that counted 2,646 urban areas in the United States and its territories. That is nearly a thousand less than the previous tally, meaning hundreds of communities have lost their status as "urban." 

The change stems from the Bureau's new definition for what qualifies as urban, which raised the population threshold for the label from 2,500 to 5,000 people. It's also now counting housing unit density rather than population density. 

In a blog post explaining the change, the agency said the federal government does not have a standard definition for urban or rural, but that its own threshold serves as a baseline. Yet over time that baseline became more of an outlier as agencies raised their thresholds. 

"The Census Bureau’s previous threshold of 2,500 people was the lowest in use and, over the years, data users and analysts have questioned the continued validity of the 2,500-person threshold and asked if the Census Bureau would consider an increase," it wrote. 

The significance of the change is that it could impact funding streams for federal programs around housing, health care, education, agriculture, and transportation. 

“The whole thing about urban and rural is all about money,” Mary Craigle, bureau chief for Montana’s Research and Information Services, told the AP. “Places that qualify as urban are eligible for transportation dollars that rural areas aren’t, and then rural areas are eligible for dollars that urban areas are not.”

In theory, the change could lead to some smaller communities losing access to funds — although, again, the Census definition is only a reference point for federal agencies. 

One upside: Seasonal communities such as beach towns could gain urban status now that the Bureau is tracking household density rather than population.