US housing shortage grew to record 4.7M units, Zillow says

The Hill

10-07-2025

The U.S. housing shortage recently grew to a record 4.7 million homes, fueling an affordable housing crisis that's pricing families out of the American dream, according to a new Zillow analysis.
The real estate website examined the latest census data and found the nation's housing deficit grew by 159,000 homes in 2023 despite a homebuilding surge over the past five years.
While that's less than the housing deficit increased in 2022, when it rose by 257,000 homes, the growth shows the pandemic construction boom hasn't been enough to narrow the gap.
'The unfortunate fact is that we still don't have enough housing in this country for people who need it,' Orphe Divounguy, senior economist at Zillow, said in the report.
The shortage is driving an affordability crisis that is pushing millions of families to double up and live with nonrelatives.
In 2023, 3.4 million homes sat vacant and available for rent or sale, while 8.1 million families shared their homes with unrelated individuals, Zillow determined. The 4.7 million-unit gap is what the company defines as the housing deficit.
More recent data shows the number of homes for sale has ticked up this year, but elevated mortgage rates and high prices mean affordability remains a challenge.
Those headwinds have made it especially difficult for younger, first-time homebuyers to get a foot in the door. Baby boomers recently overtook millennials and now account for the largest share of homebuyers.
Millennials are also sharing housing with nonrelatives more than any other generation, making up 38 percent of the families 'doubling up' in 2023, Zillow found.
Of the nation's 50 largest metros, New York City had the biggest housing deficit, short more than 400,000 units, according to Zillow.
It's hardly surprising, considering New York is the most populous city in the country and the average home there is now worth nearly $800,000, making affordable housing increasingly out of reach.
Los Angeles had the second-largest deficit, with more than 450,000 families doubling up in shared housing compared to just 115,000 available units.
Boston, San Francisco and Washington, D.C., also ranked among the top five largest housing deficits, although all three have seen their shortages improve from a year earlier.
10 metros with the largest housing deficits as of 2023 (Zillow analysis of Census data):
There aren't enough affordable homes being built in the neighborhoods and cities where demand is highest.
Part of the problem stems from strict zoning and building restrictions that have made new construction harder. But those rules vary widely from state to state and city to city, helping explain why some markets have become far less affordable than others.
A recent Zillow analysis found that builders responded faster to the pandemic-era demand spike in areas with fewer building restrictions. Some of the cities that saw the largest builder response were Pittsburgh, San Antonio, Phoenix, Dallas and Columbus, Ohio.
Meanwhile, places like Seattle, Baltimore, Detroit, Orlando, Fla. and Washington, were metros where builders underbuilt relative to expectations.
'We know what works: lower building restraints to allow for more density and less expensive housing,' Divounguy said in a statement.
A separate 2025 study from RAND found that the cost of building multifamily housing in California is more than twice as expensive as it is in Texas. Much of the difference, the report said, is driven by state and local policies that contribute to long permitting and construction timelines and higher local development fees.
It's no wonder that California now has 113 cities where starter homes now cost over $1 million. But even outside the Golden State, homeownership is becoming unrealistic for the average family.
A household earning the median income in the U.S. would need a $17,670 raise to comfortably afford the mortgage payments on a typical home, not to mention the additional funds required for a down payment.
The good news? Builders completed 1.45 million units in 2023, followed by an even stronger 1.63 million in 2024, both the highest annual totals since 2007, Zillow said.