There will be 28 new council homes built as part of the schemes underway, in Lower Valley Road, in Brierley Hill, and in Beacon Rise, in Sedgley.
The Brierley Hill site comprises 14 flats and three adapted bungalows for disabled residents. A further eight apartments and three houses are being built at the Sedgley site.
The funding of the developments is being supported by Homes England grants of more than £900,000 for Lower Valley Road and more than £600,000 for Beacon Rise.
Builder Cannock-based Jessup Partnership is working with the council to construct the new homes as part of an ongoing framework agreement. The properties are due to be completed by the new year.
Dudley housing and communities boss Councillor Laura Taylor-Childs said: "We are investing in the creation of another 28 new council homes for those in need of affordable housing. Working with Jessup Partnerships, we are committed to making sure they are homes which are both cost efficient to build and energy efficient to run.
"I look forward to seeing the completion of the work and people having the keys to their new homes."
Jessup managing director Chris Timmins said: "These sites are important additions to our development portfolio which will be crucial to providing housing for those who need them.
"It is also great to partner with Dudley Council to deliver a range of home styles including much-needed accessible bungalows for the community."
The Lower Valley Road scheme provides eight one-bedroom and six two-bedroom flats and three two- bedroom wheelchair bungalows.
Beacon Rise development includes six one-bedroom, two two-bedroom flats, two two-bedroom houses and one three-bedroom house.