Housing Supply Gap Reaches Nearly 4 Million in 2024

Key takeaways

• In 2024, new-home construction outpaced household formations for the first time since 2016. Despite this notable progress, the housing gap persists, totaling 3.8 million.
  • Home completions reached the highest level in nearly two decades due to an increase in both single- and multi-family construction.
  • An estimated 1.6 million expected Gen Z and millennial households did not form in 2024 due to various factors, including a lack of affordable housing.
• The South has the largest housing gap by number of units (1.15 million), but the smallest gap relative to total construction in the research period. The Northeast has the largest scaled housing gap, followed by the Midwest and the West.
• At a 2024 rate of construction relative to household formations and pent-up demand, it would take 7.5 years to close the housing gap.
  • Regionally, if 2024 trends continue, the South would be able to close the housing supply gap in three years, while the West would take 6.5 years, the Midwest would take 41 years, and the Northeast would not make any improvement in the gap.

The oft-discussed housing supply gap tipped the housing market off-balance over the past 12 years. Home prices started to rise in earnest in 2012, and continued to do so through 2024, suggesting that housing demand has outpaced supply over this time.

One noticeable impact of the supply gap is lower vacancy rates. Homeowner vacancy hit a historic low of 0.7% in the second quarter of 2023. Though it has recovered somewhat, reaching 1.1% in the fourth quarter of 2024, it is still well below the historic norm.  Rental vacancy has fared slightly better of late due to climbing multifamily inventory, and at 6.9%, is closer to historic norms.

Click the link to read the full article: https://www.realtor.com/research/us-housing-supply-gap-2025/