The NAR Claims There's a Chronic 5.5 Million Shortage of Houses

Here's the NAR's Claim in a 24-page PDF report.

The United States is in the midst of a severe housing shortage as a result of a persistent underproduction of housing during the last decade. From 1968 through 2000, the annual number of new housing units completed in the United States averaged 1.5 million. However, housing construction in the U.S. averaged only 950,000 new units from 2008 to 2020 and remained less than 1.3 million units in 2020, despite a recent, considerable increase in construction activity.

While the total stock of U.S. housing grew at an average annual rate of 1.7% from 1968 through 2000, the U.S. housing stock grew by an average annual rate of 1% in the last two decades and only 0.7% in the last decade, or less than half of the longer-term historical growth. 

When compared with the long-term average (1968-2020), which includes the period of dramatic underbuilding immediately following the Great Recession, the shortfall in housing completions totaled 5.8 million housing units since 2008.

It is also critical to note that the underproduction of the last decade took place in all building types, especially smaller, two-to-four-unit multifamily buildings. From 2001 to 2020, the average gap in single family housing production was slightly more than 100,000 homes per year, when compared with the long-term average from 1968 to 2000, for a cumulative gap of approximately 2 million single family homes.

Cumulative 5.5 Million Gap

Housing Starts Single Family vs Multi-Family

Housing Shortage Crisis

I had already been working on the alleged housing shortage crisis before a reader emailed the above article.

I used cumulative housing starts per year dating back to 1959. The totals are yearly so the ending year in my chart is 2020.

Starts and completions are the same barring a tiny number of accidents so my chart matches the lead chart by the NAR except my chart goes back a little further in time.

2020 vs 1959

There were fewer new homes built in 2020 than in 1959. Population adjusted, this seems to make little sense at first glance but houses last a long time. 

Housing Starts vs Number of Households

Definition of Household

A household consists of all the people who occupy a housing unit. A house, an apartment or other group of rooms, or a single room, is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live with any other persons in the structure and there is direct access from the outside or through a common hall.

A household includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit, or a group of unrelated people sharing a housing unit such as partners or roomers, is also counted as a household. The count of households excludes group quarters. 

Starts and Households Since 2000

• 25,107 Total Starts18,837 Single Family Starts
• 23,341 New Households

There were 25,107 starts and 23,341 new households. Starts were sufficient to cover households.

However, we do not know how many people wanted houses and did not get them. Nor do we know the numbers of houses that were torn down. 

Starts and Households Since 2010

• 11,866 Total Starts
• 6,900 Single Family Starts
• 14,760 New Households

Interestingly, since 2010 the US added 14,760 households but only 11,866 new houses.

Given the definition of household, the above numbers may seem impossible.