The move is part of a broader shuffle of Obama's Cabinet that includes nominating current housing chief Shaun Donovan to run the Office of Management and Budget.
During a State Dining Room ceremony, Obama praised Donovan's efforts to help the U.S. housing market recover from the recession. He says he is nominating Donovan as budget director because "when you're good at your job, people always want you to do even more."
Castro is the mayor of San Antonio and is seen as a possible Democratic vice presidential nominee in 2016. Obama says Castro has helped revitalize San Antonio, experience he will draw on as head of the Department of Housing and Urban Development.
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