The U.S. is now short 4.5 million homes as the housing deficit grows, according to a new analysis from Zillow. This deepening housing deficit is the root cause of the housing affordability crisis, now exacerbated by stubbornly high mortgage rates.
“The simple fact is there are not enough homes in this country, and that’s pushing homeownership out of reach for too many families,” said Orphe Divounguy, senior economist at Zillow, the most visited real estate website in the United States.
“The affordability crisis extends to renters as well, with nearly half of renter households being cost burdened. 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.”
Among the largest 50 metropolitan areas, the worst housing shortages can be found in coastal markets, with five of the 10 worst in California. Boston, Sacramento, Portland, San Diego, San Francisco, San Jose, Seattle, Minneapolis, Los Angeles, and Austin have the worst housing shortages in the country.
Across the U.S. in 2022, there were roughly 8.09 million “missing households” — individuals or families living with nonrelatives. Compare that to 3.55 million housing units that were available for rent or for sale, and there is a housing shortage of more than 4.5 million, the report found.
In 2022, 1.4 million homes were built — at the time, the best year for home construction since the early stages of the Great Recession. However, the number of U.S. families increased by 1.8 million that year, meaning the country did not even build enough to make a place for the new families, let alone begin chipping away at the deficit that has hampered housing affordability for more than a decade.
According to the U.S. Census Bureau, roughly 1.45 million homes were completed in 2023. The increase over 2022 is a sign of progress, but much more needs to be done.
Reforming zoning rules to allow for more density is key for more homes to be built. Experts overwhelmingly agree that relaxing zoning laws is one of the best ways to improve affordability, and these types of measures have broad support among homeowners and renters. Even adding a modest amount of density in the country’s biggest markets could create millions of new homes.
More steps in the right direction include eliminating or reducing parking requirements and minimizing delays in approval of building permits, the report concluded.
The housing shortage is defined as the difference between the number of families that were likely to be seeking their own home and the number of homes that were available for rent or sale. Families in this case are defined as sets of individuals who are related within each household. The number of families that are likely to be seeking their own home is defined by the number of families living in other families’ housing units. The family count comes from IPUMS USA using the FAMUNIT variable and the appropriate weights.
