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The U.S. housing market is currently facing a home shortage despite notable progress in new-home construction in 2024, according to a Realtor.com analysis.
The report states 1.6 million expected Gen Z and millennial households did not form last year due to many factors, including lack of affordable housing, and an increase in single- and multi-family construction home completions reached the highest level in nearly two decades.
The rise of housing prices, starting in 2012 and continuing throughout 2024, is a significant factor sustaining the supply gap. Vacancy rates also are a factor, with rates below normal levels at 1.1% in the fourth quarter of 2024.
Multi-family housing developments decreased in 2024 despite overall home completions growing, due to builders slowing building in response to an increased rental market. According to the report, this trend is likely to continue.
Trends in housing supply varied by region in the U.S., with the South reporting 751,000 regional housing starts in 2024, the most of any region. The West saw the most “missing” young households, followed by the Northeast, signaling the significant unaffordability and under-supply of houses in these regions.
The report predicts it would take 7.5 years to close the current gap at the 2024 rate of improvement, led by the creation of more affordable housing to make home ownership more accessible in the U.S.
