While the amount of new homes for sale has been slowly recovering from historically low, COVID-impacted numbers, a new report from realtor.com recently showed that the market was still missing upwards of 7.2 million homes—a result of underbuilding in relation to population growth for the last decade.
“The U.S. is in a long-term housing shortage with the construction of new homes failing to keep pace with a growing population,” said Danielle Hale, chief economist at realtor.com.
In 2023, the rate of housing starts slowed, but completions still managed to slightly rise—1.5 million units were completed in 2023 (+4.5% YoY), including 1 million single-family units (-1.9% YoY) and 450,100 multifamily units (+22.2% YoY).
Additionally, household formations outpaced housing starts in 2023. Last year, 1.7 million households were built, which raised the total number of construction completions to 17.2 million between 2012 and 2023. Homebuyers started construction on 947,200 single-family homes and 472,00 multifamily homes in 2023, as the total housing starts from 2012 to 2023 tallied 14.7 million homes—10 million of which were single-family.
The gap between single-family housing starts and household formations grew from 6.5 million to 7.2 million from 2022 to 2023. While the gap increased year-over-year, this was the third-smallest single-year gap between households and housing starts since 2016.
“While a recent uptick in new construction has the potential to alleviate the historically low level of homes for sale on the market today, it’s going to take some time to close the gap,” said Hale.
“That said, the elevated level of both single- and multifamily construction coming to market this year is likely to put downward pressure on rent prices in many markets, welcome news for renters. It also means that the higher than usual share of new homes for sale is likely to continue, giving home shoppers willing to consider new homes more options.”
For the full report, click here.
