The U.S. housing shortage reached 4.03M units as construction lags demand. Nearly 2M young adults remain priced out, delaying homeownership and household formation.
New York — The U.S. housing shortage grew to 4.03 million units in 2025 as new construction failed to keep pace with demand, deepening affordability challenges and sidelining many potential buyers.
Realtor.com® reported that while 1.36 million homes were started, about 1.4 million new households formed, leaving construction roughly 50,000 units short and pushing the deficit higher. As a result, nearly 2 million young adults remain priced out of homeownership, highlighting ongoing structural barriers that continue to limit entry into the housing market.
Instead, many younger adults have remained with parents, lived with extended family or shared housing with roommates. Economists measure these "missing households" by comparing current household formation rates with those from a decade earlier.
The South had the largest number of missing millennial and Gen Z households in 2025, but overall, the South recorded the largest number of new household formations.
Affordability remains a key barrier. The recommended income needed to purchase a median-priced starter home reached about $86,000 last year, while the typical down payment averaged 14.4%.
Analysts say the slowdown in first-time buyers may also contribute to limited housing inventory, since fewer entry-level purchases reduce the number of existing homeowners able to sell and move up the property ladder.
Source: Realtor.com (03/26) Farberov, Snejana
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