In 2023, the US housing market reached its strongest point since 2007, with 1.45 million homes added. However, despite this increase in construction, there is a growing deficit of homes in the US as more families are searching for housing. The shortage is particularly severe in five California metros and Austin and Seattle.
According to Zillow, the real estate firm, the US is facing a stubborn deficit in housing despite adding over 1.4 million homes in 2022 and an additional 1.45 million in 2023. Construction will need to accelerate significantly to have a meaningful impact on the market. Even with no population growth, the increase in housing stock is not enough to close the existing deficit.
The shortage of available housing is exacerbated by a high number of families looking for homes. In 2022, over 8 million groups or individuals were seeking housing while only 3.5 million homes were available for rent or sale. The vacancy rate in the US fell to a multidecade low of 2.5%, further highlighting the scarcity of available housing options.
Regions experiencing significant population growth such as Austin and Seattle are facing some of the worst housing shortages in the country. Zillow also identified Boston, Sacramento, Portland, San Diego, San Francisco, San Jose, Minneapolis and Los Angeles as metros with significant housing deficits.
To address these challenges head-on, Zillow has recommended policy support for construction including zoning reforms that prioritize single-family units and reducing parking requirements among other measures like ending permit delays and supporting housing trust funds.
These steps could help alleviate the current housing shortage and meet the growing demand for homes across America.
Overall, despite recent increases in construction activity within the US real estate market, it remains clear that there continues to be an urgent need for policy support aimed at addressing this ongoing issue of affordable housing supply and demand imbalance which threatens both economic stability and social well-being for many American families today.
