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(NewsNation) — The housing supply gap continues to persist, with the nation short nearly 4 million homes.
While new home construction picked up last year for the first time since 2016, the housing gap — the shortage of available and affordable housing — totaling 3.8 million remains, according to a new analysis from Realtor.com.
The company measured the housing supply gap using data on new home construction, household formations and pent-up housing demand.
The analysis found that more than 1.6 million homes were completed in 2024, the highest level in nearly 20 years.
However, despite this notable increase, the housing gap “persisted due to the magnitude of the historical gap and ongoing pent-up household demand,” the report stated.
This gap has hit young households the hardest, with home buying becoming increasingly infeasible on mid-to-average salaries, the analysis found.
In terms of region, the South has the largest housing gap by number of units but the smallest gap relative to total construction. The Northeast has the largest scaled housing gap, followed by the Midwest and the West.
The housing market made strides in terms of both new and existing inventory in 2024, but inventory remained below prepandemic levels, and the lack of affordability kept buyer demand constrained, the study noted.
Builders faced barriers such as “zoning and permitting regulations, as well as rising material costs, which make building affordable homes relatively challenging.”
At a 2024 rate of construction relative to household formations and pent-up demand, it would still take 7 1/2 years to close the housing gap, according to the analysis.