US Housing Shortage Hits 4.5 Million Homes Deficit in 2023: Prices Soar Amid Limited Supply

Diccon Hyatt is a seasoned financial and economic journalist who has extensively covered the pandemic-era economy through hundreds of articles over the past two years. He simplifies complex financial topics, focusing on how economic trends impact personal finances and the housing market. His experience includes roles at U.S. 1, Community News Service, and the Middletown Transcript.

Key Insights

• In 2023, the US faces a housing deficit of 4.5 million homes, up from 4.3 million in 2022, according to Zillow’s latest analysis.
  
• The shortage stems from underbuilding since the Great Recession, causing rent hikes and economic inefficiencies.
  
• Experts recommend increased home construction and reforming restrictive local zoning laws to address the housing gap.
  

The persistent housing shortage in the United States continues to worsen, pushing rental and homeownership costs beyond reach for many families. Zillow’s recent study highlights a growing gap where population growth outpaces housing availability, now totaling a 4.5 million shortfall in 2023.

Economists link this imbalance to insufficient homebuilding since the 2008 recession, which has led to soaring housing expenses and broader economic challenges, including reduced labor mobility due to limited affordable housing options.

"There simply aren’t enough homes in the country, making homeownership unattainable for a significant number of families," stated Orphe Divounguy, senior economist at Zillow. "Addressing this shortage is critical for improving affordability, and it requires more than maintaining current policies—it demands bold action."

Urgent Need for Increased Housing Development

Zillow’s methodology compared the number of individuals living with non-relatives versus available housing units, revealing a 4.5 million unit gap. Despite increased efforts by builders, challenges such as escalating labor and material costs, along with restrictive zoning regulations, continue to hamper new construction.

In 2022, builders completed 1.4 million homes, falling short of the 1.8 million new households formed that year, according to Census Bureau data cited by Zillow.

This shortage has propelled home prices to record highs and burdened renters significantly. In 2022, half of renter households spent 30% or more of their income on rent, with many paying over 50%, as reported by the Harvard Joint Center for Housing Studies.

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