The United States has built 5.5 million fewer housing units over the last 20 years, falling short of historical levels in new housing construction, according to a new analysis published on Wednesday.
The report, authored by the Rosen Consulting Group and released by the National Association of Realtors, found that the lack of housing units being built had a devastating impact on housing affordability and home ownership.
“The extreme shortage of for-sale inventory contributed to an untenable scenario in which robust demand is competing for a limited supply, driving housing prices higher, reducing affordability and making homeownership less accessible for low-and-moderate-income households,” the report said.
The report noted that price increases in housing outstripped growth in income, making it more difficult for people to afford average-priced homes.
“The demand-supply gap in housing during the last two decades, and a constrained supply of housing units generally, fueled rapid price increases that outpaced income growth across the country. The significantly more rapid pace of home price growth meant that many households were no longer able to afford the monthly payments needed to purchase the median-priced home,” the report said.
Addressing assumptions that the pandemic might have been responsible for making housing less affordable, the report noted that even before COVID-19, many renting households were already cost-burdened. The report noted that “more than 40% of renter households were cost burdened” and that almost 25 percent of renter households were spending more than half of their income on rent.
The report said that the housing shortage required “a once-in-a-generation response” and argued that addressing the crisis “will require a major national commitment to build more housing.”
Some of the solutions that the report outlined to make sure the housing shortage gets addressed included expanding and improving on current resources that can help in financing and lending of affordable housing development; conserving housing that is older or underutilized; and considering amending local zoning requirements to expand development space and capacity.