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The U.S. housing market is short at least 760,000 for-sale housing units and short another 760,000 for-rent housing units, according to Freddie Mac economists in a recent research article.
That means the U.S. housing market is at least 1.5 million units away from being a “balanced market.”
“To bring the vacancy rate, both rental and homeowner, back in line with historical averages, the U.S. would need to add an additional 1.5 million vacant for-sale and for-rent homes,” wrote Freddie Mac economists.
What do Freddie Mac economists think will happen if the U.S. housing market doesn’t add additional supply?
“Without such units, the pressure on housing markets will persist,” wrote Freddie Mac economists.
They also suggest that this analysis—which calculates how many units would be needed to bring the national vacancy rate back in line with the historical average—”underestimates” the overall housing shortage.
“Additionally, the vacant housing undersupply metric is almost certainly a dramatic underestimate of the total housing shortage for the U.S. This is because this metric does not account for latent housing demand and vacant housing that is not for sale or for rent,” wrote Freddie Mac economists.
Freddie Mac had previously estimated there was a 3.8 million shortage of homes, in a report that used a different methodology than the study mentioned above.
“Not to be confused with our analysis of the total U.S. housing supply shortage which showed an undersupply of 3.8 million units, the 1.5 million units highlighted in our latest economic outlook measures for-sale and for-rent units, and does not account for latent housing demand or vacant housing that is not for sale or for rent,” Len Kiefer, deputy chief economist at Freddie Mac, tells ResiClub. “Over the last several years, our research on the housing supply deficit has been widely followed, and while we’ve seen housing inventory improve slightly, a substantial undersupply still exists and remains one of the most significant obstacles facing the housing market today.”