When will we have enough houses? It could take decades
The nationwide inventory shortage — 3.8 million homes — is reaching a point of no return in some parts of the country though new construction is increasing.
Key points:
- A new report from Realtor.com found that the nation is short roughly 3.8 million homes, and the timeline to fill the supply gap looks wildly different by region.
- In the South, where new homes are needed most, the supply gap could close within three years; elsewhere, it could take decades.
- Leaders throughout the real estate industry are pushing for reforms to make housing more affordable and accessible.
Just how bad is the inventory shortage in the U.S. housing market? In some parts of the country, the supply gap could take several years or decades to close if home builders continue at the current pace of new construction, Realtor.com researchers said in a new report.
A deficit of millions of homes
The U.S. is short about 3.8 million homes, the report indicates, the largest supply gap since 2012. New construction has increased in recent years, but it's still not enough to plug the supply hole.
While new homes are accounting for a greater share of total home sales, other factors are stymying builders' ability to deliver more homes in the places that need them the most, notably restrictive local zoning, high construction costs and policy decisions at the federal level that are creating uncertainty in the economy.
In recent years, the annual supply gap has been between 2.25 million and 4.45 million homes, with the third-largest supply gap since 2012 occurring in 2024 at 3.79 million homes. The shortage has particularly impacted younger generations, with Realtor.com economists reporting that 1.6 million expected new households were not formed last year by Gen Zers or millennials due to low housing affordability.
Some regions could take decades to bridge the supply gap
With its deficit of 1.15 million units, the South has the greatest need for homes. However, the region's rate of new construction is far outpacing other areas with 751,000 housing starts reported last year, a nearly 25% increase that could help the South "see the supply gap close in just three years," Realtor.com Chief Economist Danielle Hale said during a press call with reporters.
But the deficit is more dire in other parts of the country. At the current pace of new construction, it would take 6.5 years to fill the supply gap in the West, while it would take 41 years to fill the gap in the Midwest — and the Northeast's inventory shortage would never actually close. Inventory constraints have led to stiff competition and higher home prices in the Northeast, while the Midwest was the only region where household formations outpaced housing starts in 2024.
Concerted effort needed to build more housing
Researchers have long pointed to restrictive local zoning as a primary culprit in the nation's supply shortage, and industry leaders have called on agents and other real estate professionals to join efforts to get more homes built. Housing affordability and supply were major themes at last year's NAR NXT conference, and NAR leaders continue to lobby federal and local leaders for more housing-friendly rules.
Last year, the association shelled out $86.3 million to influence election-year campaigns, and it maintains a lengthy list of legislative priorities related to inventory, fair housing and access to homeownership. More recently, NAR CEO Nykia Wright and Chief Advocacy Officer Shannon McGahn met with congressional leadership to discuss homeownership, which McGahn referred to as "one of Washington's truly bipartisan issues."
Realtor.com's top brass is also pushing for more inventory and new construction via the "Let America Build" campaign, which the company launched to coincide with the supply gap report. Making housing more attainable would be a "win for families, communities, and the entire economy," said CEO Damian Eales, "because when housing works, everything works."