Housing market short 4 million homes as construction lags

Underbuilding, missing households and policy hurdles kept the ownership ladder out of reach By Liezel Once 03 Mar 2026 Share The US housing market entered 2026 still short more than 4 million homes, with new construction in 2025 once again failing to keep up with household formation and long‑running demand from Millennials and Gen Z, according to Realtor.com’s latest Housing Supply Gap Report. The report estimated a cumulative deficit of 4.03 million homes in 2025, up from 3.8 million a year earlier, even as completions stayed historically elevated. At the same time, 1.82 million young households were “missing” as high costs and thin inventory delayed independent living. “Even when annual construction and household formation are roughly balanced, the market is still digging out from more than a decade of underbuilding,” said Danielle Hale, chief economist at Realtor.com. “A supply gap exceeding 4 million homes underscores how deeply rooted the shortage has become. Without a sustained and targeted increase in housing supply, particularly in areas with strong job growth and persistent demand, affordability challenges will continue to sideline many would-be buyers.” Affordability squeeze reshaped the first-time buyer In 2025, household formations reached about 1.41 million, versus 1.36 million housing starts. That's a gap of roughly 50,000 units that added to the long-running shortfall. The minimum recommended income to buy a median‑priced starter home was about $86,000, with...