Harvard’s Joint Center for Housing Studies (JCHS) released its State of the Nation’s Housing Report 2026 on June 17 and revealed a market where activity remains restrained, demand is weakening and high costs are sidelining many would-be buyers and renters, even as new construction slowly chips away at supply shortfalls.
In a livestreamed event the same day presented by Harvard University’s Joint Center for Housing Studies, participants offered their thoughts on the findings.
They included Erin Baldassari, senior editor, housing affordability, KQED; Chris Herbert, managing director, Harvard Joint Center for Housing Studies; Daniel McCue, senior research associate, Harvard Joint Center for Housing Studies; Marietta Rodriguez, president and CEO, NeighborWorks America; Stockton Williams, executive director, National Council of State Housing Agencies; and Sharon Wilson Géno, president, National Multifamily Housing Council.
The report shows that household growth, a key driver of housing demand, slowed for the third consecutive year in 2025, falling from an average of 2.0 million households in 2021 to just 1.1 million in 2025—still high by historic standards. The slowdown reflects reduced household formation among young adults amid weak labor markets, heavy student debt and intensifying economic uncertainty.
High home prices and elevated mortgage rates are keeping many renters from transitioning to homeownership. Home prices have increased 54% nationwide since 2020, and in 2025 the median existing single-family sales price was nearly five times the median household income. Existing-home sales remain stuck at a three-decade low of 4.1 million, and the national homeownership rate has fallen for two consecutive years.
“Many young adults simply cannot afford to form their own households and are instead doubling up or living with family,” said McCue. “For others, deep uncertainty about their financial futures and about the broader economy are causing them to delay major life decisions.”
McCue added that as big as supply issues are for housing, demand challenges emerged as a top housing headline for 2026. Whether it’s consumer confidence, job growth, population growth or inflation, the underpinnings of housing demand have weakened and activity is slowed as a result.
“Unaffordableness is also holding down new-home sales, and inventories of new homes,” he said. “So besides the flat home sales, supplies are rising in the face of sluggish demand.”
A household-growth slowdown in America has also been negatively impacting the housing market, according to Herbert.
“One thing underappreciated the whole time we’ve been talking about a shortage of housing is that we had this enormous surge in demand,” he said. “We had household growth running at 2 million a year. That’s a big number. So now if it’s fallen down to 1.1 million, which sounds like a significant slowdown, but it’s actually a pretty robust number by historical standards…we want people to recognize that this trend in downward demand is likely to continue. It’s happening now because of the economy.”
Herbert pointed to relatively weak employment growth and population decline as immigration craters and baby boomers age. JCHS is projecting that household growth will fall further, to an average of 700,000 over the next decade.
Supply, demand and government work
Rodriguez addressed the rental market across the country. NeighborWorks tracks a lot of data with nearly 250 organizations working in communities, and aggregately they own and manage over 220,000 rental homes.
“We have yet to see in that portfolio significant increases in vacancy rates in these properties,” she said. “The demand on the affordable side is still incredibly strong. We’re not meeting the need. There is still insufficient existing rental properties, which is an interesting trend because in 2016 the acquisition of rental units was one of the biggest proportions of our network’s activity, but that acquisition took a plummet by 60% from 2016 to 2025 while construction activity increased over that same time.”
Rodriguez explained that there are fewer affordable rental properties for nonprofit organizations to acquire.
“They’re just not there,” she said. “That’s the supply side of the demand equation. I think it’s important we also talk about the economic pressures that households are facing. Increased costs of everyday items, food, insurance, gas and healthcare puts more pressure on the family’s and individual’s budget every month, demanding more affordable housing.”
Williams spearheaded talk about what state and local governments are doing to improve the housing situation.
“If you think about the last 100 years or so, housing policy has been an important concern on and off for the federal government,” he said. “It’s always important at the local level because in America, local land use is really what drives all kinds of development, including housing, but states generally have been MIA on the housing policy discussion.”
Noting that a few states have previously pushed high-profile housing reforms (California most notably) with “varying degrees of success,” Williams said the trend is change, with nearly every state now taking “unprecedented action on housing.”
“Some of it involves money. So $500 million in Wisconsin, $700 million in Florida, $1 billion in Minnesota, $5 billion in Massachusetts, big numbers for new forms of financing to support housing development, both owner occupied, for-sale housing and multifamily,” he said. “But equally important has been the effort of a number of different states to try to address some of the regulatory barriers, some of the local zoning, some of the neighborhood-level opposition, some of the bureaucratic inefficiencies in public programs…there’s just been an incredible amount of focus on how to make it easier and more efficient for the private sector, for nonprofit organizations to produce new housing.”
Williams noted that if you look at the states that are starting to make progress, it’s happening over multiple legislative sessions, with hundreds of bills now passed by state legislatures in the last several years.
“There’s 36 gubernatorial races happening around the country right now, and in most of them, housing affordability is a huge campaign issue,” he said. “You know this era in California, but it’s really true everywhere. Republicans and Democrats are both talking about what they’re going to do to address housing costs in their states. So this new development of a greater role for states in addressing housing affordability is encouraging, and it shows no signs of slowing down.”
