It's not that hard to do on the cheap. The '65-'66 housing is a good idea though. Narrowing your housing that much won't require moving the perches.
Okay, first pull your axles out. When you look at the splines on the end, there will be a line that goes around the diameter, this is where the spline engages the center section of the third member. Measure how much spline is left outside of this line, meaning how much spline is left towards the wheel flange end of the axle. If you have over 1/2" to the point where the bottom of the spline starts to taper out, your good. If not, you'll likely need new axles, the aforementioned '65-'66 axles would work, but if it's just a bit, patience and a steady hand with a cutoff wheel, you can lengthen these splines a bit. If you have 400+HP potential, I'd recommend new axles, Moser is a good place to get them.
Next, pull the center section out and put each axle back into it's appropriate side of the center section to the previous mentioned line around the splines. See how much you can slide each side further into the center section. If you can bottom them out, your in good shape. If you can't, but have plenty of spline left as in the first point, you can cut a bit of the end of the axle off with a metal chop saw and bevel the end back with an angle grinder. Then take a triangle file and clean up the ends of the splines.
Third, to narrow the housing, you cut the ends off with a band saw and can either cut it again for the 1/2" or so, or just cut it once at the correct length and take the 1/2" off the housing end in a mill. You need to take the housing to a place that can properly narrow it to begin with, they'd do these operations for you. Once the pieces are at the right length, they taper the ends to be welded then they put in a third member that has bushings for a lineup bar, they put bushings in the housing ends and slide then onto the lineup bar and this makes sure everything is perfectly lined up and parallel and the ends flanges are perpendicular.
To narrow your housing will typically run about $100-$125. If you don't have to modify your axles, all your out is some brake fluid and some rear end grease and a gasket.
If I were going to buy new axles AND narrow a housing, I'd go ahead and upgrade to a 9" and do 31 spline axles and a locker.