The housing gap continues to persist as the nation is short nearly four million homes.
While new home construction picked up for the first time since 2016 last year, the housing gap totaling 3.8 million remains, according to a new analysis from Realtor.com.
The company measured the housing supply gap using data on new home construction, household formations and pent-up housing demand.
The analysis found that more than 1.6 million homes were completed in 2024, the highest level in nearly 20 years.
However, despite reaching this notable increase, the housing gap “persisted due to the magnitude of the historical gap and ongoing pent-up household demand,” the report stated.
The housing market made strides in terms of both new and existing inventory in 2024, but inventory remained below prepandemic levels, and the lack of affordability kept buyer demand constrained, the study noted.
Builders faced barriers such as “zoning and permitting regulations, as well as rising material costs, which make building affordable homes relatively challenging.”
At a 2024 rate of construction relative to household formations and pent-up demand, it would still take 7 1/2 years to close the housing gap, according to the analysis.
This gap has hit young households the hardest, with home buying becoming increasingly infeasible on mid-to-average salaries, the analysis found.
In terms of region, the South has the largest housing gap by number of units but the smallest gap relative to total construction. The Northeast has the largest scaled housing gap, followed by the Midwest and the West.
