I understand your position, and I don't think you are being deliberately unkind to SD or anything, but in honesty I would side with your husband here. For me it will always be a priority for my child to have a dedicated room at my house, even when she is an adult, which is hers to use as and when and move back into fully if she needs to.
I say this as someone who has, as an adult, had to move back in with my mom and dad at quite short notice on a couple of occasions, due to relationship breakdown. It made those tricky times in my life so much easier, knowing that there was a room for me always there - and they still have one for me, and one for my brother (his is also available for my daughter) even tho I am nearly 50!
Of course people have to downsize sometimes, or other needs arise, and financially this may just be impossible in some cases.
But I would prioritise it over a lot of other things.....
Could she have a room that also functions as a hot-desk type space for you to work in when she is not there?
Ultimately, it's your husband's home as well, and it doesn't really matter what Mumsnetters think - if your husband feels strongly his view is as valid as yours.
Out of interest (and no judgement here at all) what is your relationship like with SD. I ask because, if it's rocky, this could appear personal to her, even tho it really isnt.