Does the US have a housing shortage of 1 million or 10 million? This is why no one can agree with it

A new one White House Economic Report puts renewed focus on the housing shortage in the US and concludes that the country has a shortage of at least 10 million single-family homes. But how big that gap actually is remains an open and heavily debated question.

Recent estimates from researchers and real estate analysts range from roughly 1 million to 10 million homes, a gap that could leave consumers and real estate professionals struggling to understand the problem.

Rick Palacios Jr., research director at John Burns Research and Consulting, returned to the White House math this week: say on X that the 10 million figure “much exceeds” other estimates he has seen. His company currently estimates the gap at about 1 million homes, he added.

The large difference in deficit estimates is not necessarily due to sloppy math, but rather comes down to the more fundamental question of what exactly researchers are trying to measure.

“There’s no real agreement on what the housing shortage actually means,” said Eric Finnigan, vice president of demographic research at John Burns Research and Consulting. Inman. “If you asked ten people at a housing conference, they would all have their own idea.”

The White House estimate – from the latest version of the Council of Economic Advisers President’s Economic Report – has a different calculation. In it, researchers looked at how many more single-family homes there would be today if builders had maintained the pre-2008 pace instead of retreating after the housing crisis. That perspective makes it more of a measure of how many buildings we’ve missed, rather than what’s actually available in the current market.

John Burns Research and Consulting’s estimates, on the other hand, focus on the present – ​​specifically on whether there are enough homes available today for people actively looking to move.

A more limited, real-time view of the offer

The estimate from John Burns Research and Consulting – currently around 1 million homes – is based on vacancy rates and not long-term projections of housing need, Finnigan said.

Erik Finnigan

The company analyzes U.S. Census data on homeowner and rental property vacancy rates and compares current levels to what it considers a “normal” period between the mid-1990s and early 2000s. When vacancy rates fall below that historical baseline, it is a signal that there are not enough available homes for people actively looking to move.

In practical terms, that imbalance changes the behavior of the market.

“If you have 100 people looking for homes and only 50 are available, prices will do something completely different,” Finnigan said. “Some people won’t move, and others will raise prices.”

This approach measures whether there are enough homes for people who want to move today, and not for households that could form under other circumstances.

By that measure, both rental and owner-occupied vacancy rates today remain below normal levels – indicating a shortage – but not on the scale suggested by some better-known estimates.

The company’s latest estimate has also fallen, he said, from about 1.1 million homes a year ago to about 1 million in recent months as new construction has picked up and family formation has slowed slightly since 2022.

Why some estimates are higher

Some estimates take a broader perspective by trying to tap into pent-up demand, or households that don’t yet exist due to affordability constraints. Others focus on long-term substructure.

The White House report itself notes that the 10 million figure is largely consistent with other estimates that use different methods to measure a shortage of several million homes. But those numbers do not line up neatly. The White House models missing single-family homes, while other estimates look at the total number of homes or the supply of multi-family housing and population trends.

For example, researchers from Realtor.com recently estimated the housing supply shortage in the US to approximately 4 million homes, based on the relationship between new construction, family formation and pent-up demand.

Some models also take ‘missing households’ into account. Finnigan noted that about 18 percent of adults between the ages of 25 and 34 now live with their parents, compared to nearly 10 percent in the past. Some researchers view this gap as an unmet demand for housing.

These approaches answer a different question: they measure not whether the market is short of housing today, but how many households could be created if housing were more accessible.

The supply is not the only limitation

But even the 1 million figure comes with important caveats.

A shortage is not just about volume. It also depends on whether there are homes in the right places and at prices that people can afford.

“If you drop a million units at $1.5 million each, they’re going to be vacant,” Finnigan said.

This mismatch occurs in different markets. Parts of the Sun Belt, including metro areas like Nashville and Austin, have seen a surge in new construction and are now experiencing higher inventories and softer rents. Meanwhile, much of the Northeast and Midwest, where construction is lagging, continues to see tighter conditions and stronger price growth.

“It can feel like there are too many homes in some markets and not enough in others,” Finnigan says.

More striking, perhaps, is where Finnigan thinks the debate is going. JBREC’s deficit estimate has been cut by more than half in the past two years, he said, and could disappear entirely within a few years, according to the company’s calculations — but that alone won’t solve the problem that most Americans actually feel.

“The price of houses today, I think, is a bigger problem than the lack of supply,” Finnigan said. “It won’t help people live in homes they want to live in and in places they want to live” – unless prices fall, mortgage rates fall or incomes rise significantly.

That’s why, when faced with the total shortage figure, the most useful question may not be how many houses are missing, but how many are realistically within reach.

Email AJ LaTrace