The feud between Housing and Urban Development Secretary Samuel R. Pierce Jr. and Rep. Henry B. Gonzalez (D-Tex.), which has been simmering for more than two years, boiled up again last week. The congressman, canceling a tentatively scheduled hearing of his subcommittee on housing and community development, told its members that Pierce was unavailable because he was "out of town campaigning for the president . . . ."

Instead of testifying about Urban Development Action Grants and federal credit programs, Pierce was in Gonzalez's home district, where "his message, as reported in the San Antonio papers, is Reagan is good for the Hispanics," the congressman said.

Gonzalez said the subcommittee thought that Pierce's appearance was important because the HUD secretary hasn't testified before the subcommittee since March 1983. Gonzalez said Pierce "appears" to be making a "concerted, sustained effort to avoid appearing before . . . the prime committee" concerned with housing. "When he did appear, he was very abrasive. He took on four other congressmen, and I had to rap him into order. He was insulting, aggressive, defiant."

Gonzalez had gaveled Pierce and Rep. Mike Lowry (D-Wash.) to silence after Pierce told Lowry to "stop playing like a little boy." Pierce later told another subcommittee member, "You just don't know what you're talking about."

A Pierce appearance was never promised, said Timothy L. Coyle, deputy assistant secretary for legislation. When a Gonzalez aide asked whether Pierce could testify, he said, "I checked . . . and was told the secretary was out of town and would be unavailable to appear."

Coyle said Pierce has traveled frequently in recent weeks to "outreach seminars" on the Joint Venture for Affordable Housing, a $1.7 million demonstration project that HUD hopes will cut building costs by easing local construction codes. Pierce has not campaigned for the president since June 22 and was in San Antonio to attend a convention of the Hispanic Chamber of Commerce, said another HUD spokesman.

Gonzalez has called Pierce a "Stepin Fetchit" and said he is "inadequate, wholly unresponsive and not accessible to constitutents . . . ." Pierce retaliated by saying Gonzalez was a "charlatan . . . . so unskilled in the use of the English language that he has to resort to the use of vile, abusive and racist language in order to attack me." TAX-EXEMPT UPDATE . . .

Congress last week tried to put a Band-Aid on HUD's problems with its tax-exempt bonds so that the department can continue to run its public housing programs until a permanent solution is worked out.

HUD General Counsel John J. Knapp says that Congress put the patch in the wrong place but that it doesn't matter because the Reagan administration is prepared to carry on anyway.

The problems arose when it was discovered that the tax bill passed during the summer throws into question the tax-exempt status of billions of dollars worth of short-term bonds, which HUD uses to finance public housing development and modernization. HUD has been forced to borrow from the Treasury to pay off issues that have recently come due, and last week President Reagan raised its borrowing limit to prevent the government from defaulting on $1.5 billion worth of bonds.

HUD has been discussing with the Internal Revenue Service whether the bonds are tax-exempt, and if not, how procedures could be changed to make them so. Alternatively, Congress could change the law, but Congress moves slowly and in the meantime the bonds must be refinanced.

According to Knapp, money was added to the continuing resolution to pay the higher interest rates required to borrow from the Treasury, but it was given to Treasury instead of HUD's public housing loan fund, "which doesn't do us any good." He pointed, however, to a letter he wrote last week, assuring Senate Banking Committee Chairman Jake Garn (R-Utah) "that the failure of Congress to enact positive legislation on this subject before adjournment" will not cause a disruption because "the limit on borrowing authority may be raised without limit" and Reagan is prepared to raise it as necessary.