The United States is not building enough homes to account for the number of people setting up their own households. As a result, there is a sizable shortage of new homes after more than a decade of under-building relative to population growth, according to a new analysis from Realtor.com.
If building and household formation were to continue at their current pace — growing household formation combined with slowing housing starts — the gap would never close. Closing the total housing gap requires an increase in both single-family and multi-family supply to help return balance to the housing market by taking pressure off both sale and rent prices,
As inflation and mortgage rates likely soften lthis year, buyers are likely to return to the market and be in search of an affordable home, and the ongoing housing supply shortage will only continue to put pressure on the market. The good news is that overall inventory levels are increasing from their pandemic lows.