Realtor.com’s 2026 Housing Supply Gap report, released on Tuesday, estimates the United States faced a housing shortfall of 4.03 million homes in 2025, up from 3.80 million in 2024. The increase reflects a combination of stronger household formation last year and a slowdown in residential construction activity.
Household formation accelerated markedly in 2025, with approximately 1.41 million new households created during the year compared with roughly 999,000 in 2024. That rise in household formation added immediate demand pressure to an already constrained housing stock.
At the same time, construction activity softened. Government data released last month put housing starts at an estimated 1.359 million units in 2025, a 0.6% decline versus 2024. Completions fell more sharply: about 1.498 million units were finished in 2025, a decrease of 7.9% from the prior year. Those figures underline a narrowing pipeline of newly available homes entering the market.
Realtor.com said the growing shortfall compounds more than a decade of underbuilding. The report links that persistent underproduction to constrained supply, rising house prices and reduced access to homeownership, particularly among younger cohorts. The organization highlighted that the accumulated deficit has had lasting effects on affordability and the pace at which buyers can enter the market.
The dynamics indicated in the report - stronger household formation alongside lower starts and completions - illustrate why the aggregate supply gap expanded over the past year. The data present a snapshot of supply and demand flows that market participants and policymakers use to assess affordability, inventory pressures and related market signals.
While the report provides the headline deficit and the underlying activity measures, it does not assign specific near-term policy prescriptions. It does, however, draw attention to structural trends in production and demand that have contributed to the widening shortfall.
Data points cited in the report:
- Estimated housing supply gap: 4.03 million homes in 2025, up from 3.80 million in 2024.
- Household formation: ~1.41 million in 2025 versus ~999,000 in 2024.
- Housing starts: estimated 1.359 million units in 2025, down 0.6% from 2024.
- Housing completions: about 1.498 million units in 2025, down 7.9% from 2024.