The U.S. needs an additional 2 million to 20 million homes to fix the shortfall,” according to various estimates, a gap so wide that it underscores “the challenge of meeting the nation’s housing needs.”
Moody’s Analytics estimates the country would need “more than 2 million new homes” to resolve the shortage. Goldman Sachs puts the figure at 3 million, Zillow at more than 4 million, Brookings at 5 million, and McKinsey at 8 million. Congressional Republicans argue the number is far larger, saying the deficit is closer to 20 million homes.
At the same time, “there are economists who contend there’s no shortage at all.”
The conflicting numbers reflect how difficult it is to define what a housing shortage even means. The estimates depend on assumptions about “how much a home should cost, how many people it should hold, and how big a footprint it should have.”
With housing affordability now “a crucial political issue and increasingly out of reach for many Americans,” the question is no longer academic. It directly shapes the policies meant to solve the problem.
Counting Homes, Vacancies, and ‘Doubled-Up’ Households
Census Bureau data show that the United States has 146 million homes. Within that total are 8.1 million ‘doubled-up’ households, defined as people sharing housing with non-relatives.
Zillow’s analysis assumes that “most of those people would prefer having their own place.” At the same time, the company estimates there are 3.4 million vacant homes available for rent or purchase.
By subtracting available vacant units from doubled-up households, Zillow concluded that “the nation needs 4.7 million more homes.”
Several studies focused on two central questions:
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How many homes should be vacant?
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How many households never formed because housing costs were too high?
While vacancy might sound like waste, “a healthy housing market needs vacancies.” Empty homes may be between tenants, under renovation, or used as secondary residences. The National Association of Home Builders estimates that “more than 6 million homes — about 1 in 20 — are secondary residences.”
What qualifies as a healthy vacancy rate is debated. Experts place it anywhere from 3 percent to 13 percent. After the 2008 housing crash, vacancy rates “slumped to the lowest level in nearly two decades,” falling to 5 percent for owner-occupied homes and less than 1 percent for rentals — levels that “have yet to fully recover.”
Delayed Independence and ‘Missing’ Households
Some economists argue the housing equation must go beyond existing households.
When housing becomes unaffordable, “adult children tend to reside with their parents longer.” In 2023, 18 percent of adults aged 25 to 34 lived with a parent, compared with 8 percent in the 1970s, according to Pew Research Center.
For many analysts, the correct formula includes:
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Existing households
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Homes that should be vacant
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“Households that would naturally come into being if there was enough inventory to lower prices”
Even using this shared framework, researchers reach very different conclusions.
Moody’s Analytics and PolicyMap estimate it would take 800,000 homes to restore market balance seen between 1985 and 2000. Adding 1.2 million ‘pent-up households’, they conclude the U.S. needs 2 million additional homes.
Brookings took a different approach, aiming to return vacancy rates to 2006 levels, when they exceeded 12 percent. Using statistical modeling to separate price effects from social changes like later marriage, Brookings concluded the country needed 4.9 million more homes.
From Moderate Gaps to Massive Deficits
Other major institutions land across a wide spectrum.
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Freddie Mac estimates a shortfall of 3.7 million homes
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Goldman Sachs calculates 3 to 4 million, using both vacancy-based analysis and affordability modeling tied to 1990s income ratios
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McKinsey includes housing for homelessness and overcrowding, arriving at 8.2 million homes
Each estimate depends on how affordability, overcrowding, and household formation are defined.
What If the Market Had No Limits?
A 2022 report from congressional Republicans took a fundamentally different approach.
Rather than restoring past housing conditions, the report asked how many homes “developers would build had they had no regulatory constraints” — no zoning rules or permitting barriers.
Their model assumed land should represent about 20 percent of home costs. Anything higher was interpreted as evidence of artificial scarcity. Applying this logic nationwide, they concluded the U.S. housing shortage totaled 20 million homes.
Under this framework, states like North Dakota and West Virginia showed almost no shortage, while California alone was short 4.5 million homes.
The report argued that “any substantial effort” to reduce restrictions would lower prices. Building 2.7 million homes, they projected, could make homeownership viable for nearly 5 million additional consumers.
“If we relaxed all regulations that concerned supply in every single market in the United States, this is how many homes you would have,” said Kevin Corinth, a co-author of the report. “If you really want to bring down home prices… you’re going to have to build a lot more houses than people are suggesting.”
Construction Spending and a Different Way of Measuring Shortage
Housing analyst Kevin Erdmann approached the problem through construction spending.
Adjusted for inflation, “per capita spending on housing construction has been falling” and is now 23 percent lower than in 1990. If spending had remained at 1990 levels, Erdmann calculated the U.S. would have 40 million additional homes.
“Almost all professional estimates of the housing shortage are ridiculously low,” he wrote.
While Erdmann stops short of saying the country is short 40 million homes, he argues that, under aggressive assumptions, the true number likely falls between 15 million and 20 million.
The Argument That There Is No Overall Shortage
Not everyone agrees a nationwide shortage exists.
Urban planning professors Kirk McClure and Alex Schwartz studied 900 metropolitan areas and found that only 19 added more population than housing since 2000. They argue that overbuilding before the 2008 crash created room for slower construction afterward.
“Yes, we have a shortage of units in the low-income price points, but not overall,” McClure said. He added that boosting incomes may be more effective than building more homes: “The best housing program right now would be an increase in the minimum wage.”
Economists at the Cato Institute also argue that housing production has generally kept pace with population growth. Wanting larger homes in high-cost areas, they say, does not automatically indicate a shortage.
“A shortage is literally people don’t have anywhere to live,” said Norbert Michel of Cato. “That’s not what we have.”
What the Disagreement Really Comes Down To
At its core, the debate is not just about data — it is about definitions.
“If I have a hard time finding an apartment in the area of Washington, D.C., that I like, I can still move to Maryland and find something,” Michel said. “That’s what a shortage evokes. And the data doesn’t support that.”
Erdmann sees it differently.
“There are 28-year-olds living with their parents that wouldn’t be if there were a house,” he said. “If that’s not a shortage, I don’t know when you could use the word.
