It will take more than seven years for the U.S. to solve the current housing affordability crisis and build much-needed new inventory at the current rate of construction, according to a report by Realtor.com.
While home supply has grown across the country over the past year, with Florida and Texas leading the way, the U.S. still has 3.8 million units less than what Americans would need, the real estate listing website reported.
For aspiring homebuyers weighed down by rising home prices and stubbornly high mortgage rates, this is a bleak prediction that relief won’t be coming as quickly as hoped. It is also bad news for Donald Trump, who had promised to lower the cost of housing and grow supply during the first years of his second administration.
Why It Matters
In the years following the U.S. subprime mortgage crisis of 2008, which plunged the country into a deep recession, the country massively underbuilt in the face of new family formation and growing demand.
As a result, a historic shortage of homes has led to skyrocketing prices in recent years, causing an affordability crisis exacerbated by high mortgage rates. As of March 6, the 30-year fixed-rate mortgage was at 6.63 percent, according to Freddie Mac. Experts expect mortgage rates to continue hovering between 6 and 7 percent in 2025 and 2026, eroding the purchasing power of aspiring homebuyers.
What to Know
The good news is that homebuilders are aware of the problem and have ramped up construction efforts over the last year. For the first time since 2016, new home construction outpaced household formations last year, with roughly 1.4 million housing units started, Realtor.com said.
According to estimates by the National Association of Home Builders (NAHB), single-family home starts totaled 1.01 million, up 6.5 percent from 2023. Total housing starts, however, were 1.36 million, down from 1.42 million in 2023, due to a decline in multifamily construction.
“Single-family home building increased 6.5 percent for 2024, as builders added more supply in a market continuing to face a housing affordability crisis due to elevated mortgage interest rates and higher construction costs,” NAHB chairman Carl Harris said in a December statement.
“Nonetheless, the industry expects to see a slight gain for single-family home building in 2025 because of a persistent housing shortage and ongoing solid economic conditions.”
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The reason why new construction finally outpaced new household formation is sobering: at least 1.6 million expected Gen Z and millennial households did not form in 2024 because of factors which included a lack of affordable housing. In short, people are not settling down and becoming homeowners because they can’t afford to.
While the supply gap has diminished in the last year, it was still the third-largest since 2012, behind 2020 and 2023.
Even at this increased rate of construction, it will take 7.5 years to close the current housing supply gap in the U.S. market, Realtor.com found. “It is going to take many years to build out of this problem, given the size of the deficit,” Realtor.com Chief Economist Danielle Hale said.
South To Get Out Of The Crisis First
The U.S. housing market is incredibly varied, and some parts of the country are expected to solve the current inventory crisis before others.
According to Realtors.com, the South would be able to close the housing supply gap in only three years at the current rate of construction, which is higher than any other part of the country. Texas accounted for 15 percent of all new-home construction permits in 2024, according to National Mortgage Professional.
The West would take 6.5 years to close the gap, while the Midwest would take 41 years and the Northeast may never see an end to the crisis.
“The South is really leading the way when we think about providing housing for its population, and the West, Midwest, and Northeast are still very close to recent lows,” said Hale.
“Given the trends that we’ve seen in building, given areas where we see building happening more often, we’re seeing better or less progress toward closing that gap.”
What’s Next
NAHB expects single-family starts to grow just 0.2 percent this year to an annual rate of 1.01 million units. In 2026, it foresees single-family starts to increase by an additional 4 percent to 1.05 million units.
However, housing experts have warned that Donald Trump’s policies could have a negative impact on construction efforts across the U.S. Tariffs on Canada could increase the cost of softwood lumber, a crucial material used in homebuilding which the U.S. imports heavily from its neighbor. Further to this, mass deportation of migrants could cause a labor shortage in the construction sector.
“If there’s high tariffs coming, and if the lumber prices spike back to where they were in COVID […] it’s going to be a problem—homes are gonna stop being built, apartments are going to stop being built,” said Jared Kuhn, vice president at homebuilder technology firm Icon, at the Realtor.com SXSW event.
“Homebuilder sentiment has been on a bit of a roller-coaster ride lately, stemming from mortgage rates, concerns about housing demand, and now tariffs and other policy,” said Hale.
“We are going to see builders continue to build, but they are heading into a challenging environment, and so I think there are legitimate questions around how much they’ll be able to eat into this gap, unless we see some significant policy changes,” she added.
