US housing shortage grew to 4.5 million homes amid affordability crisis, data reveals

Despite a construction boom led by the COVID-19 pandemic, new data shows that the U.S. housing shortage grew in 2021, underscoring a deepening housing deficit and one of the root causes of the housing affordability crisis.

The study, conducted by Zillow, found that the housing shortage grew to 4.5 million homes from 2021 to 2022, up from 4.3 million houses the year before. 

While 1.4 million housing units were built during the pandemic era, the number of U.S. families increased by 1.8 million, the real estate company also found.

This means the country did not build enough to make a place for new families, let alone begin chipping away at the deficit that has hampered housing affordability. 

FILE - A home for sale on Oak Street in Patchogue, New York on May 17, 2022. (Credit: (Steve Pfost/Newsday RM via Getty Images) (Steve Pfost/Newsday RM via Getty Images)

"The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families," said Orphe Divounguy, senior economist at Zillow. "The affordability crisis extends to renters as well, with nearly half of renter households being cost burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it."

According to Zillow, the housing market is driven by supply and demand. When the number of people who want a home increases faster than the number of homes available, prices increase. The result has been worsening affordability, now exacerbated by stubbornly high mortgage rates.

Data from the U.S. Census Bureau said roughly 1.45 million homes were completed in 2023. The increase over 2023 is a sign of progress, but much more needs to be done.

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Kurt Carlton, the president and co-founder of New Western – a real estate investment company located in Dallas, Texas, said that small, local investors could help solve this ongoing problem.

"We see a great opportunity in local investors and vacant homes to solve the housing crisis," he told FOX Television Stations. "There is a movement happening with small local investors helping bring livable inventory back to the market, and at more affordable prices." 

Zillow reported that there were more than 20,500 new builds in the Dallas area last year, and nearly 12,000 homes were flipped.

"In some of our markets, flippers are even outpacing builders in bringing livable inventory to market, and in many other markets, they aren't far behind," Carlton continued.

If you’re a prospective homebuyer, Carlton suggested buying now if you can afford to.

"Jump into the market while you can. This is an infrastructure crisis we will be dealing with for a long time, the government won't get us out, and neither will the builders  – they can't keep up. Prices will continue to rise, demand will continue to rise," Carlton added. 

This story was reported from Los Angeles.