Key Details:
- The U.S. housing deficit hit a record 4.7 million homes in 2023, as new household formation continues to outpace construction.
- Roughly 8.1 million families are now “doubled up,” with Millennials making up the largest share of those sharing homes.
- Affordability remains an issue, with the median-income family needing a $17,000 raise to afford a typical home today.
The U.S. housing market is still playing catch-up.
According to a new analysis from Zillow based on 2023 Census data, America’s housing deficit grew by 159,000 units last year, pushing the total shortfall to a record 4.7 million homes.
That’s despite 1.4 million new units being added to the housing stock, more than in any year since the Great Recession.
The culprit?
Household formation continues to outpace homebuilding. Last year, 1.8 million new families were formed, while only 1.4 million homes were added to the inventory. And this isn’t a new trend, it’s the result of nearly two decades of underbuilding that began in the fallout of 2008.
Orphe Divounguy, senior economist at Zillow, put it this way:
“The unfortunate fact is that we still don’t have enough housing in this country for people who need it. Construction has helped prevent the housing deficit from ballooning, but it hasn’t yet begun to close the gap.”
With the shortage of affordable housing, roughly 8.1 million families are now “doubled up,” sharing homes with non-relatives. Millennials make up the largest share of these households at 38%, followed by Gen Z at 29%.
What about affordability?
Still rough. Fewer available homes, higher prices, and tighter lending conditions are locking buyers out in many markets. That’s why the deficit isn’t just about the total number of homes; it’s about the shortage of affordable homes.
Zillow found that, to buy a typical home today, a median-income family would need a $17,000 raise compared to 2019. In metros like San Francisco, Los Angeles, and New York, that number balloons past six figures.
Is there a solution to the housing deficit?
Builders are doing their part, completing 1.45 million homes in 2023 and 1.63 million in 2024, both the highest since 2007. But the growth is uneven. Zillow found that metros with fewer building restrictions saw faster recoveries and more balanced markets. This means that zoning matters.
Divounguy stated:
“We know what works: lower building restraints to allow for more density and less expensive housing. More of these measures at the local level can help get more homes built and begin to ease this outsize financial burden for millions of Americans.”
Among the hardest-hit metros: New York (402,000+ home deficit), LA (338,000+), and Boston (150,000+). But even mid-sized cities like Miami, Austin, and Seattle are feeling the crunch.
Until zoning changes catch up with demand, the shortfall isn’t going anywhere.
