According to Realtor.com’s latest housing market analysis, the U.S. housing market is short of 7.2 million homes. Nearly 18 million households have been formed in the past decade; however, only 10 million single-family homes were built during the same period.
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The U.S. housing market is short of 7.2 million housing units, according to Realtor.com Latest real estate market analysis. Nearly 18 million households have been formed in the past decade; however, only 10 million single-family homes were built during the same period. It may take until 2029 for builders to close the gap.
Danielle Hale
“The United States faces a chronic housing shortage, with new home construction failing to keep pace with population growth,” Realtor.com Chief Economist Danielle Hale said Tuesday. “While the recent increase in new construction has the potential to mitigate the historically low levels of homes currently on the market, , but it will take some time to close the gap.”
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In 2023, homebuilders started construction on 947,200 single-family homes and 472,700 multifamily units, bringing the total housing starts from 2012 to 2023 to 14.7 million units. 68% of these new housing starts, or 10 million units, are single-family homes.
During the same period, Americans began forming families at a record rate, with the number of new households expected to reach 17.2 million by 2023.
The U.S. Census Bureau will register 1.7 million new households in 2023 alone, widening the single-family housing inventory gap from 6.5 million households in 2022 to 7.2 million households in 2023. When multifamily housing is included, the inventory gap has widened to 2.3 million units to 2.5 million units.
To close that gap by 2028 or 2029, homebuilders will need to triple their production of single-family homes, Realtor.com said. However, if homebuilders can increase production by at least 50%, they could close the gap by 2026 or 2027.
The last time this kind of construction growth occurred was in 1970, according to the Federal Bank of St. Louis. Housing starts surge from less than 1.5 million to an all-time high of 2.4 million in 1972.
Demand for affordable new homes is strong, with 43% of new homes on the market priced under $400,000, the report said. The majority of new home buyers are Millennials (48%) and are more likely to have a household income between $100,000 and $200,000 (30%) than existing home buyers (22%).
At the metropolitan level, permitting activity drives household growth in 73 of the 100 largest metropolitan statistical areas in the United States. San Antonio-New Braunfels, Texas; Austin-Round Rock, Texas; and Deltona-Daytona Beach-Ormond Beach, Florida had the largest inventory gaps in the country at 5.1%.
Hale said that although the Builder Confidence Index reached 34 in 2023, builders are doing their best to meet demand and attract home buyers with impressive incentives.
“That said, the increased number of single-family and multi-family buildings entering the market this year is likely to put downward pressure on rental prices in many markets, which is good news for renters,” she said. “It also means the proportion of new homes for sale is likely to remain higher than usual, providing more options for homebuyers willing to consider a new home.”
Email Marianne McPherson
