JCHS: U.S. housing supply falls short

​​​​CAMBRIDGE, Mass. – ​​With the nation’s economy on sound footing and incomes on the rise, U.S. household creation has returned to a more normal pace. However, housing production still falls short, according to the 2019 St​ate of the Na​​​tion’s Housing​ report from the Harvard Joint Center for Housing Studies (JCHS).​

Several factors may be contributing to the slow construction recovery, including excess supply following the housing boom, which took years to absorb, and persistent labor shortages. However, land prices and regulatory constraints on new development are the most significant factors.

According to the report, the number of homeowners rose sharply, even as the ratio of median home price to median household income rose from a low of 3.3 in 2011 to 4.1 in 2018, a sign of declining affordability. Conditions for would-be buyers vary widely across the nation.

The number of renter households fell for the second consecutive year in 2018, a stark contrast to the increases of the 12 preceding years. Nevertheless, rents are rising at twice the rate of overall inflation. 

The share of U.S. households paying more than 30 percent of their income for housing declined for the seventh straight year in 2017. Much of the progress was among homeowners, though, whose cost-burden rate declined to its lowest level this century. ​Cost-burden rates for modest-income renter households continue to rise.

JCHS expects millennials and baby boomers will continue pushing household growth, spurring demand in the remodeling market and the demand for entry-level homes. 

Rental growth is expected to be solid as well, with 400,000 additional renter households per year expected between 2018 and 2028.

Projections depend on a number of factors, including economic conditions, housing affordability, and the pace of foreign immigration.