Key Takeaways
- The U.S. had 4.5 million fewer homes than needed in 2022, up from a 4.3 million shortfall in 2021, according to an analysis from online real estate firm Zillow.
- The housing shortage has been brewing since the housing market crash of the Great Recession. It has increased housing costs and hurt the economy in many other ways.
- Experts say more home construction and less restrictive zoning laws in municipalities could help ease the problem.
America’s chronic housing shortage, which has pushed up rents and home prices to increasingly unaffordable levels, is getting worse by the year.
That’s according to a recently published analysis by online real estate firm Zillow, which found that the U.S. had 4.5 million fewer homes than it needed in 2022, up from 4.3 million in 2021, as the population has increased much faster than the housing supply.
Economists have blamed the under-building of homes since the Great Recession for a host of economic woes, from the obvious—higher rent and housing costs—to the farther-flung, such as making the job market less efficient because it’s hard for workers to move to pursue the jobs that best suit them.
"The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families," Orphe Divounguy, senior economist at Zillow, said in a press release Tuesday. "Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it."
More Houses Need To Be Built to Meet Demand
Zillow calculated the housing shortfall by measuring how many people were living with roommates versus the number of homes available to rent or buy. There were 8.09 million people living with non-relatives, and 3.55 million units available, leaving a gap of 4.5 million.
While homebuilders have ramped up construction to meet this demand, they’ve faced challenges including rapidly rising costs for labor and building materials. Many economists and politicians also blame local zoning laws in municipalities across the country, which restrict new home construction.
In 2022, builders completed 1.4 million homes, according to Census data. That was short of the 1.8 million new families that formed that year, Zillow researchers said, citing Census data.
The housing shortage has hurt homebuyers by pushing up prices to record levels. It’s also hit renters hard. In 2022, a full 50% of renter households were “cost-burdened,” meaning they paid 30% or more of their income toward rent, and half of those cost-burdened renters paid at least 50% of their income toward rent according to an analysis by the Harvard Joint Center for Housing Studies.
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FAQs
The U.S. had 4.5 million fewer homes than needed in 2022, up from a 4.3 million shortfall in 2021, according to an analysis from online real estate firm Zillow.
What is causing the US housing shortage? ›
The current one is a result of: too few homes being built over decades; high mortgage rates making moving home unaffordable for homeowners; COVID-19 disruptions; and Wall Street investors buying up too many owner-occupied homes for rental. Will the housing shortage in the US improve?
Is the US not building enough houses? ›
From 2021 to 2022, the U.S. housing shortage grew to 4.5 million homes, up from 4.3 million. In 2022, the number of U.S. families increased by 1.8 million, while only 1.4 million housing units were built.
Does the US have an affordable housing crisis? ›
Nationally, there is a shortage of more than 7 million affordable homes for our nation's 10.8 million plus extremely low-income families. View The Gap.
How many homes need to be built in the US? ›
The United States needs at least 1.5 million additional homes, and likely many more, to relieve the nation's housing shortage, according to Freddie Mac. In the first quarter of 2024, the homeowner vacancy rate dropped to 0.8% from 0.9% the prior quarter, the mortgage buyer said in a recent report on the housing market.
What state has the highest housing shortage? ›
It's not hyperbole to declare that California's most serious economic, social and political issue is its chronic shortage of housing, particularly for families in the lower income brackets.
How to fix the housing crisis in America? ›
A better policy would be to make housing more affordable for everyone by abolishing urban growth boundaries and other land-use restrictions that have made housing expensive. Meanwhile, help for those who truly can't afford housing should come in the form of rent vouchers, not subsidies that primarily enrich developers.
What state is building the most housing? ›
Idaho and North Caroline were in 2023 the U.S. states with the highest volume of new residential construction, with over nine units authorized per 1,000 residents. On average, that year in the U.S. there were 4.51 homes authorized per 1,000 residents.
Are US homes overpriced? ›
A new report published by Fitch Ratings found that homes were overvalued by 11.1% at the end of 2023, a trend occurring in about 90% of U.S. metro areas.
Who builds the most homes in the US? ›
With nearly 80,000 closings in 2021 bringing in more than $27 billion in revenue, D.R. Horton is the largest home builder in the US for the 20th year running. It's quite literally the behemoth in the homebuilding industry, with local affiliates in service areas around the U.S.
Within the U.S., San Jose, California is the least affordable housing market. California is home to four of the 10 least-affordable housing markets in the world, including Los Angeles, San Francisco, and San Diego.
Why is US housing so unaffordable? ›
"What we are building is at the high end, because of the increased cost of construction and because we have a lot of demand from higher-income renters," says Airgood-Obrycki. Most new apartments over the last decade have gone for $1,400 a month or higher, "and that's not affordable to the majority of renters."
Where is the most affordable housing in the USA? ›
The 25 Best Affordable Places to Live in the U.S. in 2024-2025
- Green Bay, Wisconsin.
- Montgomery, Alabama.
- Hickory, North Carolina.
- Davenport, Iowa.
- Springfield, Missouri.
- Wichita, Kansas.
- Huntsville, Alabama.
- Fort Wayne, Indiana.
The housing shortage is essentially a problem of supply and demand: There is not enough housing supply to meet the demand of those who want to buy. The pandemic, inflation and rising interest rates have all contributed to the shortage.
What percentage of the US population owns a home? ›
Insights. The homeownership rate in the U.S. was at 65.9% during the fourth quarter of 2022 and was not statistically different from the fourth quarter of 2021 (65.5%) or the third quarter of 2021 (65.4%). National vacancy rates in the first quarter of 2023 were 6.4% for rental housing and 0.8% for homeowner housing.
What is the lifespan of a building in the US? ›
The average lifespan of a house in the United States is between 50 and 63 years, from construction to demolition.
What caused the US housing market crash? ›
The housing market collapse of 2008 was caused by a number of factors, including subprime mortgages, predatory lending practices, and securitization by lenders. The housing market collapse of 2008 had a devastating impact on the global economy. Millions of people lost their jobs, and many businesses went bankrupt.
Why is US housing demand so high? ›
Many people want to purchase a home, but there simply aren't enough homes on the market. The pandemic, inflation and rising mortgage rates have all worsened the shortage. Millennials are driving up demand because, after years of sitting on the fence, they are now entering the housing market.
Why was there a major housing shortage in America at the end of the war? ›
By 1946, housing shortages were especially acute on the West Coast. During wartime, the state's population had swelled. For the past five years, all economic activity had been redirected to wartime needs.
Why are private developers rejecting government money for affordable housing? ›
Stringent Requirements and Bureaucracy: Government programs often involve complex application processes, lengthy approvals, and strict compliance regulations. These hurdles can significantly delay project timelines, increasing development costs and reducing overall profitability.
