The Size of the Housing Shortage: 2024 Data

Persistently low homeowner and rental vacancy rates indicate that the U.S. housing market remains structurally undersupplied.

Comparing 2024 abnormally low vacancy rates with long-run equilibrium levels across U.S. metropolitan markets, NAHB estimates that approximately 1.2 million additional housing units are required to close the gap and restore vacancy rates to historical norms. This figure represents NAHB’s updated estimate of the structural housing deficit, defined as the cumulative amount of above-equilibrium construction needed to rebalance the market. NAHB’s baseline forecast suggests this adjustment could occur between 2026 and 2030, contingent on sustained home building activity.

Homeowner and rental vacancy rates are key indicators of housing market tightness and future price dynamics. In 2022, U.S. rental vacancy rates fell to 5.1%, the lowest level in decades, underscoring the severity of the post-pandemic housing shortage. By comparison, rental vacancy rates have averaged 6.6% since 2005, when the American Community Survey (ACS) began reporting these data. A surge in multifamily construction in 2024 led to improved rental availability across many metropolitan areas, with the national vacancy rate rising to 5.7% but remaining below the historic norm.

In contrast, single-family construction remains significantly constrained by structural barriers, including restrictive zoning regulations, limited land availability, and persistent labor shortages. As a result, owner vacancy rates continued to decline through 2023, reaching a record low of 0.8%, the lowest level observed in the ACS series. While showing a modest improvement in 2024, owner vacancy rates remain below 1%, compared with the post-2005 average of 1.8%, indicating that for-sale housing shortages persist nationally.

ACS data provide a granular view of vacancy rates across metropolitan areas and allow geographic identification of structural imbalances. The “long run” average vacancy rates can serve as a proxy for normal, or natural, vacancy rates. There are numerous reasons why normal vacancy rates may differ across metropolitan areas. For example, areas with mobile labor markets and higher population turnover will consistently experience higher vacancy rates. Vacation destination housing markets also naturally have higher vacancy rates, reflecting more volatile seasonal housing demand.

For example, according to NAHB’s estimates, the rental vacancy rates in Panama City, FL, and Sebastian-Vero Beach, FL, have hovered around 20% since 2005. The averages were even higher in Myrtle Beach, SC, fluctuating around 28%. In sharp contrast, many areas in California, including Santa Maria-Santa Barbara, Santa Cruz-Watsonville, San Jose-Sunnyvale-Santa Clara, Oxnard-Thousand Oaks-Ventura, and Los Angeles-Long Beach-Anaheim, registered long-term rental vacancy rates below 4%.

In the case of homeowner properties, natural vacancy rates are usually lower, reflecting slower housing turnover, with owners moving in and out less often compared to renters. It is important to remember that owned seasonal (occasional use) properties do not affect the homeowner vacancy rate. In this context, the vacancy rate is the proportion of vacant units for sale within the combined stock of homeowner-occupied, sold but not yet occupied, and for-sale units. Therefore, vacation or other seasonal properties are excluded from this analysis.

Nevertheless, long-term homeowner vacancy rates tend to be higher in resort areas. Consistent with this pattern, several metro areas along the coast of Florida report some of the highest long-term owner vacancy rates. In Sebastian-Vero Beach, FL, and Naples-Immokalee-Marco Island, FL, owner vacancy rates have fluctuated around 4% since 2005. By contrast, San Jose-Sunnyvale-Santa Clara, CA, experienced owner vacancy rates below 1% most of the time.

The gap between the “natural” or long-run average vacancy rate and the current vacancy rate helps estimate the number of rental and for-sale units needed to restore vacancy rates to their long-run equilibrium. Unsurprisingly, large metro markets have the greatest shortage of vacant rental and for-sale units, mainly due to their size. In these areas, even a small percentage decrease below the long-run average vacancy rates can lead to a shortage of thousands of vacant units.

As of 2024, the Chicago-Naperville-Elgin, IL-IN-WI metro area needed close to 40,000 rental units to bring the rental vacancy rate back to normal levels.  The rental shortages in the New York-Newark-Jersey City, NY-NJ, and Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro areas were around 20,000 units.

Similarly, the largest shortages of vacant units for sale were observed in major metropolitan areas, including Chicago-Naperville-Elgin, IL-IN-W; Atlanta-Sandy Springs-Roswell, GA; New York-Newark-Jersey City, NY-NJ-PA; Phoenix-Mesa-Scottsdale, AZ.

Adding vacancy shortages across metro areas with unusually low vacancy rates, there is a total shortage of about 1.2 million vacant units nationwide (almost equally split between rental and for-sale units).

NAHB’s estimates focus narrowly on the number of vacant units required to return current vacancy rates to their long-run equilibrium levels. They do not incorporate additional sources of housing shortfall, such as pent-up demand from suppressed household formation or the need to replace aging and obsolete housing stock. As a result, NAHB’s estimates should be interpreted as lower-bound estimates of the overall housing shortage and are smaller than estimates that explicitly attribute elevated rates of shared living arrangements and the unusually high share of young adults residing with parents to the U.S. housing shortage. While we admit we do not have definitive answers, we believe the estimates presented here provide a reasonable updated national assessment of the current structural housing deficit.