U.S. Housing Market Faces 4 Million-Home Shortage--Realtor.com® Calls on Lawmakers to Let America Build
- 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, [email protected]
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SOURCE Realtor.com