- The 3.8 million home shortfall is the third-largest since
2012
- At the current pace, closing the housing gap would take an
estimated 7.5 years nationwide—3 years in the South, 6.5 years in
the West, 41 years in the Midwest, and the
Northeast making no progress
- Many Millennials/Gen Zers chose to live with others,
leaving an estimated 1.63 million "pent-up" households unformed in
2024 that would have otherwise widened the gap
AUSTIN,
Texas, March 10, 2025 /PRNewswire/ -- More than a
decade of underbuilding has left the U.S. with a shortage of
nearly 4 million homes, according to a new analysis from
Realtor.com®. With home prices and rents
stretching budgets to their limits, this persistent supply gap is
pushing homeownership increasingly out of reach for millions of
Americans. To tackle one of the biggest barriers to affordability,
Realtor.com® is launching Let America
Build, a national campaign advocating for solutions that expand
housing supply.
While recent construction gains show progress, they highlight
the urgent need for bold policy action.
Realtor.com®'s recent analysis found that in
2024, home completions grew to 1.6 million, the highest level in
nearly two decades, driven by an increase in both single- and
multi-family construction. For the first time since 2016, new
construction activity outpaced household formations. Yet, the
nation still faces a supply shortfall of 3.8 million homes—the
third-largest annual gap since 2012, trailing only 2020 and 2023.
At the 2024 pace, closing the gap would take 7.5 years, with the
South catching up in three years, the West in 6.5 years, the
Midwest in a staggering 41 years, and the Northeast making
little to no progress.
Despite more homes being started last year, rising housing costs
compounding on top of a lack of availability has kept many young
adults from forming new households. Instead, many Millennials and
Gen Zers opted to live with family or roommates, leading to an
estimated 1.63 million "pent-up" households that didn't materialize
in 2024. These households are an important part of understanding
the challenge, and contribute to the almost 4 million total housing
supply gap, highlighting the unmet demand for homes.
"While builders made strides last year, the scale of the
historic housing shortage, paired with strong pent-up demand, meant
that new supply couldn't fully close the nearly 4 million-home
gap," said Danielle Hale, chief
economist, Realtor.com®. "Young households are
particularly feeling the strain, as buying a home on an early- to
mid-career salary is increasingly out of reach for many. Though a
rise in both multi- and single-family construction offered some
relief amid low existing inventory, addressing the gap will take
sustained effort and smart policy."
Realtor.com® Launches Let America
Build
Realtor.com®'s
national Let America Build campaign is
advocating for solutions that cut through red tape, restrictive
zoning, and outdated regulations that are constricting the ability
to build the homes America needs. The initiative calls on lawmakers
at every level to make bold, pro-building choices.
Realtor.com® aims to join forces with some
of the biggest industry leaders, including builders, policymakers
and housing advocates to push for actionable change that will help
create more homes—faster.
"America's housing shortage is holding back economic growth,
driving up costs, and making it harder for millions of families to
find a home," said Damian Eales, CEO
of Realtor.com®. "Through Let America
Build, we're rallying the right voices to push for real
solutions that will unlock supply and make homeownership more
attainable. That's a win for families, communities, and the entire
economy—because when housing works, everything works."
New Construction Overtakes Household Formations; Costs
Sideline Young Households
As policymakers, industry
leaders, and advocates discuss solutions to address the housing
shortage, recent construction data shows some progress. For the
first time since 2016,
Realtor.com®'s report found new home
construction outpaced household formations in 2024. Fewer than 1
million new households were formed in 2024—the slowest annual pace
since 2016. Meanwhile, 1.36 million homes were started, exceeding
household formations by nearly 400,000. Despite overtaking
household formations, total housing starts were at their lowest
level since 2020, largely from a slowdown in multi-family
construction, while single-family housing starts surged to their
second-highest level since 2007, as builders ramped up production
to address the shortage of existing homes on the market.
Multi-Family Construction Slows Amid Rising Rental
Supply
While overall home completions grew last year,
multi-family housing starts fell to their lowest level since 2017.
After several years of strong multi-family activity, builders
pulled back, particularly in high-density developments, responding
to an oversupply in the rental market post-pandemic. This is likely
foreshadowing a lower pace of new multi-family rental supply that
will be completed in the near future. Still, the increase in
both single- and multi-family completions helped drive overall
inventory gains.
Regional Shifts: South Leads the Way
Housing supply
trends varied widely by region. The South saw the most significant
improvements in their housing gap in 2024, shrinking by 24.9%;
however, it still has the largest gap by volume, with 1.15 million
units needed. In the West, decent levels of new construction
combined with only modest household formation contributed to the
region's progress in narrowing its housing gap by 13.4%. The
Midwest saw only modest progress, with a 2.4% reduction in its gap.
In contrast, the Northeast was the only region where the gap
widened, growing by 1.2% over the year, with 1.04 million units
needed.
Realtor.com® at SXSW: Sparking the Conversation on
Housing Solutions
To further underscore the urgent
need for more affordable homes,
Realtor.com® hosted three key panel
discussions at South by Southwest – the popular Austin, Texas-based festival and conference
known for fostering innovation across tech, policy, and culture.
The sessions explored innovative solutions in
homebuilding, Texas'
approach to housing policy, and America's inventory and
affordability crisis and featured prominent speakers, including
Austin Mayor Kirk Watson; John
Ho, CEO of Landsea Homes;
Realtor.com® Chief Economist Danielle Hale; and Sara Bronin,
Founder & CEO of the National Zoning Atlas, among
others. Watch the replays here.
Methodology
To view the complete 2025 Housing Supply
Gap report and its methodology,
visit https://www.realtor.com/research/us-housing-supply-gap-2025/.
About
Realtor.com®
Realtor.com®
pioneered online real estate and has been at the forefront
for over 25 years, connecting buyers, sellers, and renters with
trusted insights, professional guidance and powerful tools to help
them find their perfect home. Recognized as the No. 1 site trusted
by real estate professionals, Realtor.com®
is a valued partner, delivering consumer connections and a
robust suite of marketing tools to support business growth.
Realtor.com® is operated by News Corp
[Nasdaq: NWS, NWSA]
[ASX: NWS, NWSLV] subsidiary
Move, Inc.
Media Contact: Sara Wiskerchen,
press@realtor.com
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SOURCE Realtor.com
