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America would need to add 4.3 million homes to end its housing affordability crisis, according to a new report released Thursday by Zillow.
During 2021, there were 8 million “missing households” across the country — families without homes of their own — compared to just 3.7 million housing units available for rent or sale, adding up to a deficit of 4.3 million homes, according to the report.
“The U.S. housing market is like a high-stakes version of the game musical chairs,” Orphe Divounguy, senior economist at Zillow said in a statement. “There are simply not enough homes for millions of people. Unless we address the shortage of smaller, more-affordable, starter-type homes, we risk leaving families without a seat — and it will only get worse over time.”
The report notes that for each of the 3.7 million housing units available for rent or sale across the country in 2021, there were more than two potential households — families in need of a home who may be “doubling up” in someone else’s home. This means if every missing household was willing and able to move into their own home, 4.3 million households would still be without a place of their own.
More than two-thirds of families doubling up are of low income, earning $35,000 a year or less, illustrating the deep need for more affordable housing units.
Housing inventory has only continued to empty out since 2021, with the housing market now sitting at a standstill. Mortgage rates north of 6 percent have made most would-be sellers reluctant to list their homes and lose their lower mortgage rates.
Over 90 percent of homeowners with mortgages have a rate below 6 percent, while more than 80 percent enjoy a rate below 5 percent. The average 30-year fixed mortgage rate was 6.43 percent in May, up from 5.23 a year earlier and the record low of 2.65 percent seen in 2021.
Zillow noted in its report that much of the blame for the current inventory shortage can also be placed on the decline of housing construction relative to the growth of the U.S. economy since the 1960s, due in part to land-use restrictions, building approval delays and stunted construction sector growth all contributing to a lack of new home construction.
Experts are nearly unanimously in agreement about the need to loosen restrictive zoning laws to allow for more housing construction, according to the report, and point to Zillow research finding that four out of five adults support allowing more, smaller-home types to be built in their own neighborhoods.
