Report: U.S. housing shortfall approaches 4 million
More than a decade of underbuilding has left the U.S. with a shortage of nearly four million homes, according to a new analysis from Realtor.com.
The report states 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. However, the U.S. still faces a supply shortfall of 3.8 million homes—the third-largest annual gap since 2012, trailing only 2020 and 2023, per Realtor.com's data.
At the 2024 pace, closing the gap would take 7.5 years, with the South catching up in 3 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.
New construction overtakes household formations; costs sideline young households
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, according to Realtor.com. 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.
View the complete 2025 Housing Supply Gap report and its methodology here.
