Despite a pandemic construction boom, the U.S. housing shortage grew to 4.5 million homes in 2022, up from 4.3 million the year before, further exacerbating the housing affordability crisis.
That's according to a recent analysis from Zillow, which also reported roughly 8.09 million "missing households" — individuals or families living with nonrelatives — in 2022. Compare that to 3.55 million housing units that were available for rent or for sale, and there is a housing shortage of more than 4.5 million.
"The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families," said Orphe Divounguy, senior economist at Zillow. "The affordability crisis extends to renters as well, with nearly half of renter households being cost-burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it."
While the pandemic-era housing frenzy sparked a construction boom, that boom has fallen short. In 2022, 1.4 million homes were built, marking the strongest year for home construction since the early phase of the Great Recession. However, with 1.8 million new U.S. families emerging that year, not enough homes were constructed to accommodate these new families, let alone address the longstanding housing deficit that has impacted affordability for over a decade.
One indicator of housing affordability is how strict a region's land-use rules are, new Zillow research shows. Those who live in highly regulated housing markets, as defined by the Wharton Residential Land Use Regulatory Index, are less likely to be able to afford the mortgage payment on a typical home in their metro, even in markets with higher-than-average incomes. This is because the housing supply persistently falls short.
One of Zillow's solutions noted in its analysis involves the reformation of zoning rules to allow for more density.
New York, N.Y. claimed the top metro area with the largest housing shortage, being short 389,924 homes as of 2022. That was up 3.6 %, or 13,548 units, since the year prior. Following New York were Los Angeles with a shortage of 336,728 homes and Chicago with a shortage of 97,379.
According to the U.S. Census Bureau, roughly 1.45 million homes were completed in 2023. While the increase over 2022 is a sign of progress, much more needs to be done.
More details from the report can be found here.
