The Deficit That Defines the Market
The US has a housing shortage estimated at 3.5-5 million units. This deficit didn't appear overnight — it's the result of a decade of underbuilding after the 2008 crash, combined with population growth and job concentration in expensive metros. The practical effect is relentless upward pressure on both prices and rents.
New housing starts have improved but remain insufficient. Total starts ran at about 1.4-1.5 million annualized units in 2024, versus the estimated 1.7-1.8 million needed to close the gap. Single-family construction is constrained by land costs, labor shortages, and regulatory burdens. Multifamily surged in 2022-2023 but has pulled back as financing costs rose.
Why We Can't Build Fast Enough
The barriers are structural. In the 50 largest metros, 75% of residential land is zoned exclusively for single-family homes. Permitting timelines average 6-18 months. Impact fees, environmental reviews, and neighborhood opposition add cost and delay. The construction workforce lost 600,000 workers in the 2008 recession and never fully recovered.
The implication for consumers: waiting for housing prices to return to 2019 levels is likely futile. The structural shortage provides a floor under prices that interest rate changes alone can't break through. The only long-term solution is building more — and that requires zoning reform, faster permitting, and workforce expansion that are politically and practically difficult.