US Faces Massive Gap in Housing Stock, Report Finds

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5.5 million

That’s how many homes need to be built in the U.S. to fill the need, the National Association of Realtors estimates in a new report—and builders aren’t catching up anytime soon.

This massive gap between supply and demand—a major reason for today’s frenzied residential real estate market—has been brewing for decades, researchers commissioned by the realtor group said in a report released Wednesday. The total stock of housing in the U.S. has grown by an average of 1% over the last 20 years and just 0.7% over the past 10 years, less than half of the 1.7% it averaged between 1968 and 2000 and not nearly enough to keep up with the demand. That exacerbated a growing affordability crisis for one of the most fundamental household expenses, contributing to escalating sale prices and rising rent, they wrote in the report. 

To put the numbers in perspective, filling the gap and keeping up with demand would take building more than 2 million homes a year for the next 10 years or 1.78 million for the next 20 years, the researchers estimated—far more than the current trajectory. 

Builders were on pace in May to break ground on 1.57 million homes over the course of a year, including 1.1 million single-family homes, according to the Census Bureau’s monthly report on new residential construction released Wednesday. That’s a 3.6% increase over April’s figures, but below the annualized rate of 1.62 million that economists at Moody’s Analytics had expected and the 1.73 million rate seen in March. Builders pushing to meet the demand for homes face several headwinds, including high building materials costs and supply chain problems, according to economists.

“Following decades of underbuilding and underinvestment, the state of America’s housing stock, which is among the most critical pieces of our national infrastructure, is dire, with a chronic shortage of affordable and available homes to house the nation’s population,” the researchers wrote in the report.

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  1. National Association of Realtors. "Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing."

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