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U.S. Housing Supply: Recent Trends and Policy Considerations

At the September 12, 2023, Planning Commission meeting, Commissioner Joel Yodowitz introduced the Congressional Research Reports on housing, and read a passage from the report “U.S. Housing Supply: Recent Trends and Policy Considerations.”

The excerpt that Commissioner Yodowitz read at the Commission meeting is on Page 14.

Apart from slowing construction, some regulation already directly impacts supply. Notably, certain zoning restrictions—such as single-family zoning requirements, minimum lot sizes, and parking requirements, among others—affect how much land can be built on and how many housing units can be built on that land. Another factor that can further exacerbate these issues is existing residents’ opposition to new developments near or in their own neighborhoods. Requirements for community hearings or input, therefore, may slow or halt construction projects. Additionally, community opposition to regulatory changes that would reduce costs, such as zoning reform, could perpetuate existing challenges.

Official government data on the cost of regulation on the construction or renovation of housing do not exist. However, some private groups have done such analyses. According to a 2021 study by the National Association of Home Builders (NAHB), state, local, and federal government regulations accounted for 23.8% of the average sales price of a new single-family home in 2021(down from 24.3% in 2016 and 25% in 2011). On a dollar basis, the average cost of regulation accounted for $93,870 in 2021, up from $84,671 in 2016 and $65,224 in 2011.

Comments on this excerpt:

Note that the cost of regulation is for all regulation related to construction.

One of the purposes of the Gateway Area Plan is to have a single CEQA approval for the entire plan — so that each developer would not have to individually go through the CEQA process. This has the effect of saving the developer potentially hundreds of thousands of dollars on a single project.

The report states that the increase in costs of regulation for a new single-family home has gone from $65,224 in 2011 to $93,870 in 2021. That is a 44% increase in 10 years.

During the same period of time, the cost of the construction materials in the US increased between 44% to 54%. Median house prices in California more than doubled. The year 2011 was the bottom of a recession — prices and wages were depressed. Since that time, the cost of just about everything involved in the construction of housing has gone up.

“Apart from slowing construction, some regulation already directly impacts supply. Notably, certain zoning restrictions — such as single-family zoning requirements, minimum lot sizes, and parking requirements, among others — affect how much land can be built on and how many housing units can be built on that land.”
The Gateway Area Plan is designed to reduce or eliminate these regulatory barriers to efficient housing construction.

Contents of this article

Included in this report and four others from the US Congress Research on housing.

U.S. Housing Supply: Recent Trends and Policy Considerations. July 7, 2023. 16 pages.
Introduction to U.S. Economy: Housing Market. July 2, 2019, Updated May 3, 2021. 3 pages.
The U.S. “Housing Recession.” August 21, 2023. 4 pages.
Ownership of the U.S. Rental Housing Stock by Investor Type. December 13, 2022. 5 pages.
US Congress Research Housing Issues report. July 14, 2023. 50 pages.

Here are some selected passages from these reports.

From: The U.S. “Housing Recession”

Despite high home prices and rents, homebuilding has slumped. One of the main ways economists measure spending in the housing market is by tracking private fixed residential investment, a component of gross domestic product (GDP).

From: U.S. Housing Supply: Recent Trends and Policy Considerations

At the national level, several measures indicate that housing supply may be relatively low. Local housing market conditions can vary substantially, and national indicators do not necessarily accurately reflect conditions in a particular local market. These national indicators seem to suggest, however, that supply constraints may be an important factor in many housing markets across the country

New housing units, as measured by total population-controlled housing starts (housing starts divided by total population), have trended downwards in recent decades, most notably after the 2007-2009 crisis. Starts for multifamily rental properties increased over this period but represent a small portion of total starts.

Identifying the main causes of lagging housing supply can be important not only in understanding the issue but also in considering potential policy options to increase supply without increasing price. In recent decades, increasing regulatory costs, restrictive zoning and land use, and changing demographics have contributed to supply issues. The housing market crash in 2007 significantly impacted supply, with the construction industry (and therefore new housing construction) never fully recovering and therefore contributing to the underbuilding gap. In more recent years, disruptions from the COVID-19 pandemic and rising inflation have increased costs of inputs to construction, and policies to counteract rising inflation have increased mortgage financing costs. On a longer-term horizon, climate change may be a risk to housing supply should natural disasters increase in frequency or intensity, as they have in recent years.

The Reports

.

U.S. Housing Supply: Recent Trends and Policy Considerations

July 7, 2023 16 pages

Introduction to U.S. Economy: Housing Market

July 2, 2019 Updated May 3, 2021 3 pages

The U.S. “Housing Recession”

August 21, 2023 4 pages

Ownership of the U.S. Rental Housing Stock
by Investor Type: In Brief

December 13, 2022 5 pages

Housing Issues in the 118th Congress

Can be viewed as a stand-along article, with some of the charts extracted for easier viewing. See the article on Arcata1.com here.

July 14, 2023 50 pages

Note: What is shown below are text copies of the original documents, made for this website. They are included here only so that the contents of the original document can be searchable. (The PDF files are not searchable with this website’s search facilities.)

These documents will contain typographical errors and other departures from the original. The PDF displayed above is accurate. The text below is not accurate. It is printed here for indexing purposes, so that each word can be indexed and included in the search.

U.S. Housing Supply: Recent Trends and Policy Considerations

U.S. Housing Supply: Recent Trends and
Policy Considerations
July 7, 2023

Congressional Research Service
https://crsreports.congress.gov
R47617

SUMMARY

U.S. Housing Supply: Recent Trends and Policy
Considerations
At the national level, several measures indicate that housing supply may be relatively low. Local
housing market conditions can vary substantially, and national indicators do not necessarily
accurately reflect conditions in a particular local market. These national indicators seem to
suggest, however, that supply constraints may be an important factor in many housing markets
across the country. A few key points are summarized below.

R47617
July 7, 2023
Lida R. Weinstock
Analyst Macroeconomic
Policy

•

When accounting for population, the housing stock (total number of housing units) remained largely unchanged between 1980 and 2022.

• Across rental and owner-occupied markets, vacancy rates have decreased since the housing market crash
and financial crisis of 2007-2009. Vacancy rates dipped further during the COVID-19 pandemic and hit
several-decade lows in 2022.

• The number of single-family homes available for sale each year has trended downward since 2000 but
particularly after the housing crisis of 2007-2009.

• New housing units, as measured by total population-controlled housing starts (housing starts divided by
total population), have trended downwards in recent decades, most notably after the 2007-2009 crisis. Total
starts rose at a relatively slow pace in the years after, never recovering to pre-2007 levels. (Starts for
multifamily rental properties increased over this period but represent a small portion of total starts.)

•

Several research organizations have found evidence of supply or underbuilding gaps in the U.S. housing
market, although estimates of the number of units needed to close this gap differ.
Relatively low housing supply, especially when demand for housing is strong, can cause undesirable frictions in the housing
market. One of the main results of low supply has been decreasing affordability. Prices for both homeowners and renters
have increased over recent decades, even when controlling for inflation and income. Rental and owned-housing affordability
indexes have also shown a trend of decreasing affordability in the past decade, and cost burdens are fairly widespread for
those at or below median income. Additional issues may arise at the local level, such as housing shortages based on job
growth or demographic changes in a particular location, and individual preferences may be harder for the housing market to
meet due to supply or price constraints.
Identifying the main causes of lagging housing supply can be important not only in understanding the issue but also in
considering potential policy options to increase supply without increasing price. In recent decades, increasing regulatory
costs, restrictive zoning and land use, and changing demographics have contributed to supply issues. The housing market
crash in 2007 significantly impacted supply, with the construction industry (and therefore new housing construction) never
fully recovering and therefore contributing to the underbuilding gap. In more recent years, disruptions from the COVID-19
pandemic and rising inflation have increased costs of inputs to construction, and policies to counteract rising inflation have
increased mortgage financing costs. On a longer-term horizon, climate change may be a risk to housing supply should natural
disasters increase in frequency or intensity, as they have in recent years.
Given the specific challenges facing housing supply, policy considerations may differ notably at the local level and national
level. Policymakers may be equally interested in local and national supply issues and policies. Further, many of the supply
constraints discussed in this report are regulated at the local level. To the extent that the federal government has policy
authority in national and local housing markets, Congress may have influence in shifting the housing supply curve when it
comes to the inputs to building new units and refurbishing existing ones, potentially by incentivizing local zoning reform and
construction, among other things.
For related issues and background on the housing market, see CRS Report R47628, Housing Issues in the 118th Congress,
coordinated by Katie Jones.

Congressional Research Service

U.S. Housing Supply: Recent Trends and Policy Considerations

Contents
Introduction and Economic Context …………………………………………………………………………………… 1
Trends in Housing Supply ………………………………………………………………………………………………… 2
Housing Stock …………………………………………………………………………………………………………… 2
Vacancy Rates …………………………………………………………………………………………………………… 3
Available Single-Family Housing Inventory………………………………………………………………….. 4
Housing Construction…………………………………………………………………………………………………. 5
Consequences of Low Housing Supply ………………………………………………………………………………. 7
Affordability Implications …………………………………………………………………………………………… 7
Housing Mismatch in Local Markets ……………………………………………………………………………. 9
Causes of Low Housing Supply ………………………………………………………………………………………. 10
Regulatory Costs ………………………………………………………………………………………………………. 11
The Cost of Financing ………………………………………………………………………………………………. 12
Construction Input Costs …………………………………………………………………………………………… 12
Natural Disasters ……………………………………………………………………………………………………… 13
Aging in Place Trends ………………………………………………………………………………………………. 14
Policy Considerations …………………………………………………………………………………………………….. 14
Policy Options for Lowering Cost of Inputs ………………………………………………………………… 15
Federal Government Recommendations and Grants for Local Reform………………………. 15
Incentives for the Construction Industry………………………………………………………………… 16
Improving Supply Chains ……………………………………………………………………………………. 16

Figures
Figure 1. Total Housing Units …………………………………………………………………………………………… 3
Figure 2. Homeowner Vacancy Rate ………………………………………………………………………………….. 4
Figure 3. Rental Vacancy Rate ………………………………………………………………………………………….. 4
Figure 4. Inventory of Single-Family Homes for Sale ………………………………………………………….. 5
Figure 5. Months’ Supply of Single-Family Homes……………………………………………………………… 5
Figure 6. Ratio of New Privately Owned Housing Units Started to Population ……………………….. 6
Figure 7. Real Home Prices and Ratio of Single-Family Median Home Price to Income ………….. 8
Figure 8. Real Rent and Ratio of Median Asking Rent to Income ………………………………………….. 8

Contacts
Author Information………………………………………………………………………………………………………… 17

Congressional Research Service

U.S. Housing Supply: Recent Trends and Policy Considerations

Introduction and Economic Context
While the national housing market may be marked by certain characteristics, the supply and
demand for housing may vary notably locally across the country. Supply conditions can vary
greatly from place to place depending on historical factors, construction trends, and pre-existing
stock and infrastructure. Job markets, infrastructure, public transportation, and density all differ
among locations and can contribute to changing demographics and household characteristics.
These local differences can influence the demand to own or rent and whether to do so in a
detached dwelling or multifamily structure. The result can be large variations in price and
availability across localities.
Supply and demand for housing are fairly fixed in the short term. On the supply side, new homes
cannot be built—nor can existing homes be refurbished—overnight. Constructing or renovating
housing is a lengthy process, and delays and disruptions may occur at any step. First, land must
be available. The available land must be properly zoned for the type of housing being built.
Owners/builders must secure financing, obtain necessary permits, and potentially wait for
environmental studies to be conducted. Plans must be submitted to local governments to ensure
compliance with all building codes and local ordinances. (In certain scenarios, homeowners’
associations or other organizations may have to be consulted.) Once the construction process
begins, the necessary raw materials, machinery, and labor could prove scarce. Once housing is
built, final inspections are generally required before occupancy. All in all, depending on the type
and location of housing, this process can take several years and could include unforeseen delays
and disruptions. Many projects never actually come to fruition. All of this is to say that
meaningfully changing the amount of housing available across price points takes time.1
On the demand side, at the national level, the population ultimately determines the demand for
housing. Trends over time in demographics and household formation can change the level of
demand, but in the short term, absent a shock to the housing market (such as during the COVID19 pandemic), demand is fairly static.2 There are a certain number of people, and all of those
people presumably want shelter.
This report focuses on the important policy question of whether there is enough housing generally
for the population. Related to this is another policy question: What can policymakers do to
expand the supply of housing, and what can they not do? Lastly, there is the question of whether
there is adequate housing locally that meets individual preferences. While this report focuses on
the first and second questions and discusses national-level trends and policy considerations, locallevel considerations can provide important context for aggregate trends, and as such, this report
briefly discusses certain local considerations, as relevant.
This report first discusses various metrics and customary interpretations of housing supply (in
relation to housing demand) and how those trends affect other aspects of the housing market. The
report then discusses factors that have contributed to housing market trends in recent decades and
considers potential policy options available to Congress.

1 See CRS In Focus IF12048, High Home Prices: Contributing Factors and Policy Considerations, by Mark P.

Keightley and Lida R. Weinstock.
2 For example, see David Albouy, Gabriel Ehrlich, and Yingyl Liu, Housing Demand, Cost-of-Living Inequality, and
the Affordability Crisis, National Bureau of Economic Research, Working Paper no. 22816, November 2016, p. 2,
https://www.nber.org/system/files/working_papers/w22816/w22816.pdf.

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U.S. Housing Supply: Recent Trends and Policy Considerations

Trends in Housing Supply3
No single metric paints a complete picture of the housing supply in the United States. Instead,
economists rely on several measures to summarize the housing supply. These measures are not
always comparable, and they do not always segment clearly. This section discusses a few such
measures, including stock, vacancy rates, inventory, and construction metrics. Where possible,
owner-occupied versus rental markets are parsed, although this is not entirely possible with all of
the data.4 Additionally, owner-occupied and rental housing markets interact with one another.
Homes can transition between being owner-occupied and rented, and this directly affects how
much of each type of housing exists. For the purposes of analysis in this report, the focus is on
overall supply (inclusive of all housing types). Data are caveated as necessary.

Housing Stock
One of the clearest ways of thinking about housing supply is to look at how many housing units
exist in the country.5 As shown in Figure 1, the number of housing units in the United States
increased at a fairly steady rate between 1980 and 2022. The population of the United States also
grew over this time. When accounting for population ages 16 and over, the number of housing
units was essentially stagnant over this period, with the number of housing units fluctuating
between 0.5 and 0.6 per person.6 Data used here do not account for the rate at which a single
household may own or rent multiple housing units or the rate of household formation. A steady
housing stock indicates steady supply over time and therefore does not necessarily indicate a
housing supply issue. However, overall housing stock numbers do not provide information about
changes in the type, size, or quality of housing.

3 For more details on overall housing market trends and current housing policy issues, see CRS Report R47628,

Housing Issues in the 118th Congress, coordinated by Katie Jones.
4 For example, single-unit, detached homes are sometimes used as a proxy for owner-occupied homes, but, in actuality,
a growing percentage of that market is rentals.
5 Census defines housing unit as “a house, an apartment, a group of rooms, or a single room occupied or intended for
occupancy as separate living quarters.” See https://www.census.gov/housing/hvs/definitions.pdf.
6 This type of statistic could be calculated in various ways and using various types of population data. This is only one
methodology and may not be illustrative of all other methodologies.

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U.S. Housing Supply: Recent Trends and Policy Considerations

Figure 1.Total Housing Units
1980-2022

Source: CRS calculations based on Census Bureau, Housing Vacancies and Homeownership Historical Tables, Table
7. Annual Estimates of the Housing Inventory: 1965 to Present, https://www.census.gov/housing/hvs/data/
histtabs.html; and Bureau of Labor Statistics (BLS), “Current Population Survey,” https://www.bls.gov/cps/
data.htm.
Notes: Figure uses population based on BLS definition of civilian noninstitutional population for those ages 16 and
older. This includes all people residing in the United States who are not on active duty in the military or in
institutions, such as prison. Foreigners residing in the United States are included in this number. BLS does not
provide the civilian noninstitutional population for all other age groups back to 1980. For more information, see
BLS, “Current Population Survey: Concepts,” https://www.bls.gov/opub/hom/cps/concepts.htm. Housing data are
affected by revisions in 1981, 1989, 1993, and 2002.

Vacancy Rates
Vacancy rates measure how much housing inventory is vacant at a given time. Housing units
could be vacant for a variety of reasons, such as being on the market for sale or rent or in the
middle of renovations. From 1980 to 2007, the amount of vacant owner-occupied and rental
housing units as a percentage of all units was somewhat volatile but did not have a discernible
trend.7 Figure 2 shows the vacancy rate since 1980 for owned homes, while Figure 3 shows the
vacancy rate for rented homes over the same period.8 In general, for the structures with
comparable units, the vacancy rate for rental units has been higher than that for owned homes.
However, across types of properties and markets, vacancy rates have decreased since the housing
7 From the first quarter of 1980 to the first quarter of 2023 the owner vacancy rate went from 1.3% to 0.8%, and the

rental vacancy rate went from 5.2% to 6.4%. See Census Bureau, Housing Vacancies and Homeownership Historical
Tables, Table 1. Quarterly Rental Vacancy Rates: 1956 to Present, and Table 2. Quarterly Homeowner Vacancy Rates:
1956 to Present, https://www.census.gov/housing/hvs/data/histtabs.html.
8 Census calculates the rental vacancy rate, expressed as a percentage, by dividing the number of vacant year-round
units for rent by the sum of renter-occupied units, vacant year-round units rented but awaiting occupancy, and vacant
year-round units for rent. Census calculates the homeowner vacancy rate, expressed as a percentage, by dividing the
number of vacant year-round units for sale by the sum of owner-occupied units, vacant year-round units sold but
awaiting occupancy, and vacant year-round units for sale. Year-round units is defined as those intended for occupancy
at any time, even if they are not always in use. See Census Bureau, Current Population Survey Design and
Methodology, October 2006, pp. 11-2, 11-4, https://www.census.gov/housing/hvs/files/tp-66.pdf.

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U.S. Housing Supply: Recent Trends and Policy Considerations

market crash and financial crisis of 2007-2009. Vacancy rates dipped further during the COVID19 pandemic and hit several-decade lows in 2022. Altogether, the current vacancy rates indicate
relatively low housing availability.9
Figure 2. Homeowner Vacancy Rate

Figure 3. Rental Vacancy Rate

1980-2022

Source: Census, Housing Vacancy and
Homeownership Historical Tables, Table 6,
https://www.census.gov/housing/hvs/data/
histtabs.html.
Notes: Figure uses data that incorporate most
recent American Housing Survey data for number
of units in a structure. Data are affected by
revisions in 1993 and 2002.

Source: Census, Housing Vacancy and
Homeownership Historical Tables, Table 5,
https://www.census.gov/housing/hvs/data/
histtabs.html.
Notes: Figure uses data that incorporate most
recent American Housing Survey data for number
of units in a structure. Data are affected by
revisions in 1993 and 2002.

Available Single-Family Housing Inventory
The number of single-family homes for sale each year has trended downward since 2000 but
particularly after the housing crisis of 2007-2009, as shown in Figure 4.10 The total number of
single-family units for sale decreased each year since 2018, hitting a two-decade low in 2021.
New homes for sale actually increased over this period but still remained below their 2006 peak.
The recent decrease in single-family homes for sale was a result of significant decreases in the
availability of existing homes, which was four times smaller in 2021 than in 2007, when it
peaked.
Months’ supply of housing measures the balance of supply and demand in the housing market. It
is calculated as the ratio of active listings at the end of a month to the number of sales during that
month, and it indicates how long current for-sale inventory would last if no new homes went on
the market.11 While there is some disagreement about the exact amount of supply that would
constitute a balanced housing market—one in which price appreciation is relatively stable—many
housing economists typically put that number around between four and six months.12 What
9 For more information about quarterly vacancy rates during the housing crisis and pandemic, see Census, Housing

Vacancy Rates Near Historic Lows, March 12, 2022, https://www.census.gov/library/stories/2022/05/housing-vacancyrates-near-historic-lows.html.
10 The data in this section are focused on single-family homes available for sale. However, once sold, a home could be
occupied by the owner or rented by the owner.
11 Wichita State University Center for Real Estate, “What Is ‘Months’ Supply’?,” https://realestate.wichita.edu/
question/what-is-months-supply/.
12 For example, see National Association of Realtors (NAR), “Inventory and Months’ Supply,” January 22, 2021,
https://www.nar.realtor/blogs/economists-outlook/inventory-and-months-supply; and Redfin, “Real Estate Glossary:
Definition of Months of Supply,” https://www.redfin.com/definition/monthsof-supply.

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constitutes a balanced housing market may additionally differ from place to place. A lower
number generally indicates that there are relatively few sellers compared to buyers. Assuming
four to six months’ supply indicates a housing market in equilibrium, anything above six months
indicates a surplus of housing, and anything below four months indicates a shortage. As shown in
Figure 5, the months’ supply of homes has trended downward since the housing crisis. The
months’ supply of new homes is higher than that of existing homes, which has been lower than
pre-crisis for several years. The months’ supply of new homes most recently indicates equilibrium
in that market, but the months’ supply of existing homes indicates a shortage over the past few
years.
Figure 4. Inventory of Single-Family
Homes for Sale

Figure 5. Months’ Supply of SingleFamily Homes

2000-2021

Source: Department of Housing and Urban
Development (HUD) U.S. Housing Market
Conditions data, which uses data from the
National Association of Realtors (NAR),
https://www.huduser.gov/portal/ushmc/
hs_newsf.html.
Note: Existing homes data are not available prior
to 1999.

Source: HUD and NAR via HUD,
https://www.huduser.gov/portal/ushmc/
hs_newsf.html.
Notes: Existing homes data are not available prior
to 1999. Dashed gray lines represent the range of
balanced months’ supply. Values above this range
represent a surplus of homes, and values below
this range represent a shortage of homes.

When the months’ supply of homes is evaluated along with the relatively low inventory of homes
for sale, the combination would suggest low supply to satisfy the demand in the single-family
homes market.

Housing Construction
Low inventory and vacancy rates in the national housing market would generally signal to
homebuilders that with a demand for more units, they may be able to receive higher prices in the
future, prompting them to increase construction. There are several metrics to measure the level of
construction in the United States, including new permits, starts, completions, units currently
under construction, and private spending on construction.
Figure 6 below shows population-controlled housing starts (starts divided by total population)
since 1980. Although somewhat cyclical with the business cycle, housing starts have more
recently trended downward.13 Notably, housing starts fell rapidly after the housing and financial
13 An additional facet to declining construction is declining construction of specific types of housing. For example, the

share of construction of “starter homes”—single family homes of 1,400 square feet or less—has been trending
(continued…)

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U.S. Housing Supply: Recent Trends and Policy Considerations

crisis of 2007-2009, then rose at a much slower pace in the years after, and never fully recovered
to pre-2007 levels. Despite the declining vacancy rates in 2022, construction starts actually
decreased in 2022.
Figure 6. Ratio of New Privately Owned Housing Units Started to Population
1980-2022

Sources: U.S. Census Bureau, “New Residential Construction Historical Data, Housing Units Started by
Purpose and Design,” https://www.census.gov/construction/nrc/historical_data/index.html; and BLS, “Current
Population Survey,” https://www.bls.gov/cps/data.htm.
Notes: Single family data are not disaggregated by for sale versus rent. Figure uses population based on BLS
definition of civilian noninstitutional population for those ages 16 and older.

The pace of residential construction is subject to the availability of labor, supply chains, and
financing costs, which may have contributed to what has been referred to as an underbuilding gap
in recent decades.14 While the exact magnitude of the underbuilding of housing units is debatable,
many observers agree that the gap exists and puts upward pressures on housing prices.15

downward over the past several decades. This alone does not necessarily contribute to low supply of all units but may
have negative consequences for specific demographic groups or specific local markets. However, such trends are not
within the scope of this report. See Sam Khater, “The Housing Supply Shortage,” Freddie Mac Presentation for the
Bipartisan Policy Center, December 2021, https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/12/
BPC-Final-Supply-Presentation.pdf.
14 For example, see Bipartisan Policy Center, “Getting Serious About Housing Supply Series,”
https://bipartisanpolicy.org/getting-serious-about-housing-supply-series/.
15 For example, a report from NAR suggests an underbuilding gap of 5.5 million units from 2000 to 2020 and a
cumulative gap of 6.8 million units in 2020. Using different methodology, Freddie Mac estimated a gap of 3.8 million
units in 2020. In either case, the gap is significant. See Kenneth T. Rosen et al., “Housing Is Critical Infrastructure:
Social and Economic Benefits of Building More Housing,” Rosen Consulting Group for NAR, June 2021,
https://cdn.nar.realtor//sites/default/files/documents/Housing-is-Critical-Infrastructure-Social-and-Economic-Benefitsof-Building-More-Housing-6-15-2021.pdf; and Freddie Mac, “Housing Supply: A Growing Deficit,” May 7, 2021,
https://www.freddiemac.com/research/insight/20210507-housing-supply. For a review of the above and additional
estimates of housing gaps, see Annie Lowrey, “The U.S. Needs More Housing Than Almost Anyone Can Imagine,”
The Atlantic, November 21, 2022, https://www.theatlantic.com/ideas/archive/2022/11/us-housing-gap-costaffordability-big-cities/672184/.

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U.S. Housing Supply: Recent Trends and Policy Considerations

Consequences of Low Housing Supply
Metrics of housing supply offer mixed evidence on the overall supply of housing. On the one
hand, the housing stock has remained steady over the past several decades. On the other hand,
housing construction has trended downward and inventories are relatively low. To determine if
housing supply is low (relative to housing demand), economists often look to wider housing
market conditions. Relatively low housing supply, especially when demand for housing is strong,
can cause undesirable frictions in the economy. This section provides a brief overview of selected
notable issues that can and have arisen from low supply, including rising prices and a lack of
housing options.
Evidence suggests that low supply may be an issue concentrated in particular markets, for
particular types of housing, or at particular price points. For example, even if enough housing
units exist in the aggregate, there may not be enough housing units that are available and
affordable to certain income brackets. Such discussions are largely outside the scope of this
report, but this section briefly highlights certain statistics that support the idea that supply issues
may be concentrated.

Affordability Implications
In economics, price changes are a direct result of changing supply, demand, or both in a particular
market. The housing market has been no exception. With strong demand for housing, but lagging
supply, prices have increased. For example, when many people bid on a smaller set of houses, the
final prices are likely to be higher compared to when there is a larger set of houses available for
sale. As illustrated in Figure 7 and Figure 8, prices for both homeowners and renters have
increased over recent decades, even when accounting for inflation or income.16 Prices can also
rise due to improvements in the quality of housing. Certain measures account for quality changes.
For example, the U.S. Federal Housing Finance Agency produces house price indexes based on
repeat transactions on the same physical property units, which helps to control for differences in
housing quality in its sample.17 According to this measure, for owner-occupied single-family
properties, year-over-year price increases have been positive since the early 1990s, apart from the
period during and immediately after the housing crisis (2007-2011).18

16 Figure 7 and Figure 8 do not account for the entire housing market. Notably, owned units in multifamily buildings

are not included.
17 Charles A. Calhoun, OFHEO House Price Indexes: HPI Technical Description, March 1996, p. 1,
https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/1996-03_HPI_TechDescription_N508.pdf.
18 Federal Housing Finance Agency (FHFA) House Price Index Datasets are available for download at
https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index-Datasets.aspx#mpo.

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Figure 7. Real Home Prices and Ratio of
Single-Family Median Home Price to
Income
1980-2022

Sources: CRS calculations based on HUD’s U.S.
Housing Market Conditions reports, which use
data from NAR for existing home prices and the
Census American Community Survey for median
family income, available at
https://www.huduser.gov/portal/ushmc/
hd_home_prices.html. Inflation data are from the
BLS Consumer Price Index (CPI),
https://www.bls.gov/cpi/data.htm.
Notes: Median family income was used for
consistency with HUD methodology for
affordability considerations. Owned units in
multifamily buildings are not included.

Figure 8. Real Rent and Ratio of Median
Asking Rent to Income
1988-2022

Sources: CRS calculations based on Census
Current Population Survey and Housing Vacancy
Survey Historical Table 11A. Quarterly Median
Asking Rent: 1988 to Present, available at
https://www.census.gov/housing/hvs/data/
histtabs.html. Inflation data are from the CPI, and
median family income data are from the American
Community Survey.
Notes: Data are affected by revisions in 1989,
1993, and 2002.

In addition to actual prices, housing and rental affordability indexes can also be useful to
consider. NAR calculates a housing affordability index that measures whether a family with
median income can qualify for a mortgage on a median-priced home with a 20% down
payment.19 Mortgage affordability is a function of mortgage interest rates as well as home prices,
meaning that mortgages can become more affordable because interest rates decreased, prices
decreased, or both. Since 1980, the affordability index for fixed-rate mortgages has generally
trended upward, meaning that home buying became more affordable. Even though house prices
were increasing over this period, low mortgage rates enhanced affordability. Affordability has
trended downward since 2012—decreasing notably between 2020 and 2022—but still remains at
an index value that indicates a family with median income can afford a median fixed rate
mortgage.20
The U.S. Department of Housing and Urban Development (HUD) calculates a rental affordability
index that considers “whether a typical renter household has enough income to qualify for a lease
on a typical rental home at the national level” based on median income among renters and the

19 NAR no longer produces the Housing Affordability Index Composite Index owing to FHFA’s discontinuation of the

release of certain mortgage rates. As such, this CRS report considers only the index for fixed-rate mortgages, which
NAR continues to produce. For more details, see NAR, “Housing Affordability Index,” https://www.nar.realtor/
research-and-statistics/housing-statistics/housing-affordability-index.
20 For Fixed-Rate Housing Affordability Index, see U.S. Department of Housing and Urban Development (HUD),
“U.S. Housing Market Conditions National Housing Market Summary and Data,” Fixed-Rate HAI,
https://www.huduser.gov/portal/ushmc/hd_hsg_aff.html.

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median price of rental units.21 Based on HUD’s methodology, rent affordability trended
downward between 2001 and 2021 and hit an index level below 100 in 2021, indicating that the
typical renter household did not have the income required to qualify for a lease on a typical rental
home.22
Another indication that lower affordability has become a widespread issue in housing markets is
high rates of cost burden among renters and homeowners. (By standard definition, cost-burdened
households spend more than 30% of household income on rent or mortgage payments.23)
According to a recent Fannie Mae analysis, across the 30 most populous core-based statistical
areas,24 between 30% and 60% of owner households earning median income or less for their areas
were cost-burdened, and between 50% and 90% of analogous renter households were costburdened in 2019.25 The Harvard Joint Center for Housing Studies analyzed cost burdens by
income bracket using 2020 data. According to this analysis, cost burdens are more widespread
among lower-income households, with over 70% of households making under $30,000 costburdened and almost 50% of households making between $30,000 and $44,999 cost-burdened.26

Housing Mismatch in Local Markets
Perhaps the most obvious result of low supply in the housing market is an actual lack of adequate
housing. NAR creates a housing “shortage” tracker that compares new permits to new jobs in
metropolitan areas.27 According to NAR, the historical average across metropolitan areas is one
permit per every two new jobs, which NAR categorizes as sufficient supply.28 A majority of
metropolitan areas do not meet this criterion. A little over half of the areas considered by NAR
have one permit per three or more new jobs. Based on single-family permits only, there are even
21 This index assumes that to qualify for a lease, a household must have an annual income of which the rent in question

is 30% or less. See HUD, “HUD’s New Rental Affordability Index,” November 7, 2016, https://www.huduser.gov/
portal/pdredge/pdr-edge-trending-110716.html. Some question the use of housing cost to income ratio as an appropriate
measure of affordability, because such ratios do not account for the fact that the housing costs incurred by a household
are partly a choice rather than a necessity. For example, some households may choose to pay more than 30% of their
income on rent for the convenience of living closer to work or having a larger unit with better amenities. Opponents of
the 30% affordability threshold also point out that this measure implies that a household must have at least 70% of its
income left for non-housing-related spending. But this suggests that a household making, for example, $40,000 needs
twice as much money for non-housing spending than an identical household earning $20,000 ($28,000 vs. $14,000,
respectively).
22 HUD, “U.S. Housing Market Conditions National Housing Market Summary and Data,” Rental Affordability Index,
https://www.huduser.gov/portal/ushmc/hd_rai.html.
23 Some households, particularly those at the higher end of the income distribution, may choose to be cost-burdened.
24 According to 2020 standards for delineating core-based statistical areas, they are defined as “a geographic entity
associated with at least one core of 10,000 or more population, plus adjacent territory that has a high degree of social
and economic integration with the core as measured by commuting ties.” See Office of Management and Budget,
Office of Information and Regulatory Affairs, “2020 Standards for Delineating Core Based Statistical Areas,” 86
Federal Register 37770-37778, July 16, 2021.
25
Kim Betancourt et al., “The U.S. Housing Shortage from a Local Perspective,” Fannie Mae, October 2022, p. 8,
https://www.fanniemae.com/media/45106/display.
26 Harvard University, Joint Center for Housing Studies, The State of the Nation’s Housing 2022, p. 7,
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
27 Metropolitan area is defined as an area with at least 100,000 total non-farm employees.
28 NAR, “Housing Shortage Tracker,” September 2022, https://www.nar.realtor/research-and-statistics/housingstatistics/housing-shortage-tracker. This tracker proxies shortages and likely does not do so perfectly. For example,
every new job does not necessarily indicate the need for a housing unit, and the availability and condition of existing
stock may be an important factor in the extent to which new housing is needed. Nonetheless, this proxy can provide
useful information on the pace of job growth compared to the pace of housing stock growth in local areas and help
identify those areas that may be falling behind on housing needs relative to others.

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fewer areas with sufficient supply. As mentioned in the “Housing Construction” section above,
several sources, including NAR and Freddie Mac, have additionally identified a gap between how
many units exist and how many units are demanded.29
On a national level, it is not necessarily obvious that there is a shortage of housing units. There
may be housing gaps, but it is not clear that there are not enough units for the population on the
whole. Instead, the market appears to be clearing at a higher price point. However, even if there
are technically enough units to house the population, that may not be true at certain price points
or in certain locations. For example, the NAR shortage tracker notes several metropolitan areas
that showed a 1:1 permit to new job ratio, while other areas had much higher ratios, such as
Springfield, IL, with a ratio of 1 permit for every 20 new jobs. Supply constraints in local markets
can also lead to shortages of houses at certain price points even if there are technically enough
units per household. A 2022 report from Fannie Mae analyzes housing shortages from a local
perspective and identifies eight different types of metro areas that have different supply and
economic characteristics. These different characteristics have led, in the authors’ estimation, to
varying levels of affordability and differing needs in terms of the types of housing necessary to
address supply and affordability concerns.30
Another potential mismatch resulting from relatively low housing supply is that individual
preferences may result in distortions in housing markets as individuals make decisions to meet
their preferences at a given price point. There may not be adequate housing across price points for
all types of housing and in all locations. Therefore, the higher prices resulting from relatively low
supply and high demand could result in people needing to compromise on the type of housing or
housing location in order to afford housing.31 This type of phenomenon might not be obvious in
aggregate statistics but could result in distortions in local and national housing markets if
widespread enough. For example, increased migration from 2018 to 2020 away from popular but
expensive markets to more affordable markets resulted in increasing home prices in the
destination markets, particularly in the West and South.32

Causes of Low Housing Supply
The combination of high and rising home prices and rents but largely stagnant or decreasing
supply trends (depending on the metric) suggests that supply is not adequately responding to
these higher prices. Generally, this lagging supply in the face of increasing prices suggests that
costs to building homes has increased or that there are other barriers to increasing supply. A
complicating factor is that supply does not respond immediately to prices or policy changes, and
therefore determining if supply is increasing appropriately is an inexact science.
This section briefly highlights a few of the most commonly cited specific explanations of why
housing supply may not be responding adequately to demand and price changes and is not meant
to be an all-inclusive list of factors that could be contributing to lagging supply. Of note, some
conditions or policy stances that may contribute to relatively low housing supply may be
29 A housing gap and an affordable housing gap are related but distinct phenomena. An affordable housing gap refers to

the difference between how many units are available that households of certain incomes could afford and how many
units that particular group of earners demands. Low supply likely exacerbates the affordable housing gap, but an indepth analysis of the link between the two is not within the scope of this report. For example, see National Low Income
Housing Coalition, “The Gap: A Shortage of Affordable Rental Homes,” https://nlihc.org/gap.
30 For details of Fannie Mae’s analysis, see Betancourt et al., “The U.S. Housing Shortage from a Local Perspective.”
31 For more detail, see CRS In Focus IF12048, High Home Prices: Contributing Factors and Policy Considerations, by
Mark P. Keightley and Lida R. Weinstock.
32 Khater, “The Housing Supply Shortage.”

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desirable in others ways. This section is meant only to highlight conditions that could be
contributing to low supply and does not purport to evaluate the full costs and benefits of any
policy. In addition, many policy proposals act on the demand side of the housing market, which is
beyond the scope of this report.

Regulatory Costs
The cost of acquiring and preparing land for construction has increased relative to the price of the
housing units being built in recent decades.33 In some areas, there is little undeveloped land to
build on, and this partly explains why land prices would rise. But even in those areas, price
signals would eventually lead to greater housing density absent regulatory obstacles to increasing
supply. According to a Freddie Mac analysis, tightening land use restrictions (discussed below)
are partly responsible for this increasing cost, which can cause significant delays in permit
approvals, slowing the rate of new construction.34
Apart from slowing construction, some regulation already directly impacts supply. Notably,
certain zoning restrictions—such as single-family zoning requirements, minimum lot sizes, and
parking requirements, among others—affect how much land can be built on and how many
housing units can be built on that land.35 Another factor that can further exacerbate these issues is
existing residents’ opposition to new developments near or in their own neighborhoods.
Requirements for community hearings or input, therefore, may slow or halt construction projects.
Additionally, community opposition to regulatory changes that would reduce costs, such as
zoning reform, could perpetuate existing challenges.36
Official government data on the cost of regulation on the construction or renovation of housing
do not exist. However, some private groups have done such analyses. According to a 2021 study
by the National Association of Home Builders (NAHB), state, local, and federal government
regulations accounted for 23.8% of the average sales price of a new single-family home in 2021
(down from 24.3% in 2016 and 25% in 2011).37 On a dollar basis, the average cost of regulation
accounted for $93,870 in 2021, up from $84,671 in 2016 and $65,224 in 2011.38 Researchers at
the Wharton School created the Wharton Residential Land Use Regulatory Index in 2006 and
updated it in 2018. In comparing the index across these years, researchers found:
In terms of the regulatory process, the number of entities needed to approve projects
requiring a zoning variance is increasing in the typical place. This makes the process more
cumbersome and increases the potential for projects to be vetoed. Density controls are also
used more widely and are more severe on average. The use of minimum lot sizes to control
33 Freddie Mac, “What Is Causing the Lean Inventory of Houses?,” July 27, 2017, https://www.freddiemac.com/

research/forecast/20170726-lean-inventory-of-houses.
34 Freddie Mac, “What Is Causing the Lean Inventory of Houses?”
35 Alexander Von Hoffman, “Single-Family Zoning: Can History Be Reversed?,” Harvard Joint Center for Housing
Studies, https://www.jchs.harvard.edu/blog/single-family-zoning-can-history-be-reversed; and Catie Gould, “Shifting
Gears: Why Communities Are Eliminating Off-Street Parking Requirements—and What Comes Next,” Lincoln
Institute of Land Policy, October 12, 2022, https://www.lincolninst.edu/publications/articles/2022-10-shifting-gearseliminating-off-street-parking-requirements.
36 Freddie Mac, “What Is Causing the Lean Inventory of Houses?”
37 Paul Emrath, Government Regulation in the Price of New Home: 2021, NAHB, May 5, 2021, https://www.nahb.org//media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-governmentregulation-in-the-price-of-a-new-home-may-2021.pdf. Estimates for 2016 and 2011 can be found at
https://www.nahb.org/-/media/F927CA599F4343F19541BD9F929E50ED.ashx and
https://eyeonhousing.wordpress.com/2011/07/08/government-regulations-25-cost-of-a-new-home/, respectively.
38 Emrath, Government Regulation in the Price of New Home: 2021.

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density is now almost omnipresent. And, it is no longer uncommon to see one-acre (or
greater) minimums in suburban areas; this was much rarer in the 2006 data. Other
regulations investigated (e.g., open space requirements and affordable housing programs)
do not show such big increases in the aggregate, but there also is no evidence they are
declining—either in usage or strictness of enforcement. The one exception involves impact
fees on developers. The aggregate propensity for communities to impose them fell by onethird, from about 75% in the 2006 survey to 50% in 2018.39

The Cost of Financing
The trend in interest rates in the U.S. economy directly affects the housing market by affecting
borrowing costs for building, renovating, and purchasing homes.
Following a prolonged period of high inflation and interest rates, the Federal Reserve began
lowering the federal funds rate in the mid-1980s. In response to the 2007-2009 housing and
financial crisis, the Federal Reserve reduced the federal funds rate to a range of 0-0.25%, where it
remained unchanged for several years. Since early 2022, the Federal Reserve has aggressively
raised the federal funds rate to combat high inflation.40 As a result, borrowing costs have
increased, which has potential implications for the housing supply.
Homebuilders are heavily reliant on borrowing to finance new construction. Higher interest rates
increase the costs of financing residential construction and renovation. As the costs of building
and refurbishing homes increases, the rate of construction can slow and the supply of new homes
can tighten. According to the NAHB, rising interest rates, along with rising material costs, have
raised construction costs and slowed the rate of homebuilding, perpetuating the “long-term
housing deficit.”41 In addition, rising rates can disincentivize existing homeowners from moving
so that they do not lose the low mortgage rates they received in the past, lowering the inventory
of existing homes for sale.42 A recent academic estimate suggests that, given projected mortgage
rates (and holding other variables constant),43 moving could decline by around 25% between
2018 and 2033, which could significantly diminish available housing inventory.44

Construction Input Costs
Employment in the residential building construction industry fell by roughly 465,000 jobs from a
peak in April 2006 to a trough in January 2011, coinciding with the housing market crash and
financial crisis of 2007-2009. Despite job growth in this industry since 2011, employment in
residential building construction has still not recovered to 2006 levels. For the construction
industry as a whole, the monthly job openings rate has fairly consistently been above 4% between
39 Joseph Gyourko, Jonathan Hartley, and Jacob Krimmel, The Local Residential Land Use Regulatory Environment

Across U.S. Housing Markets: Evidence from a New Wharton Index, National Bureau of Economic Research Working
Paper no. 26573, December 2019, https://www.nber.org/system/files/working_papers/w26573/w26573.pdf.
40 For more information on the inflation and Fed’s actions in response, see CRS Report R47273, Inflation in the U.S.
Economy: Causes and Policy Options, by Marc Labonte and Lida R. Weinstock. For more information on monetary
policy more generally, see CRS In Focus IF11751, Introduction to U.S. Economy: Monetary Policy, by Marc Labonte.
41 NAHB, “Rising Interest Rates, Higher Construction Costs Slow Housing Production,” press release, June 16, 2022,
https://www.nahb.org/news-and-economics/press-releases/2022/06/rising-interest-rates-costs-slow-housing-production.
42 Nicole Friedman, “The Home Buyer’s Quandary: Nobody’s Selling,” Wall Street Journal, May 10, 2023,
https://www.wsj.com/articles/low-mortgage-rates-home-sales-low-supply-899aab29.
43 The authors control for zip code fixed effects, county and year fixed effects, mortgage and borrower controls, and a
zip code house price index.
44 Julia Fonseca and Lu Liu, “Mortgage Lock-In, Mobility, and Labor Reallocation,” Social Science Research Network,
March 24, 2023, p. 3, https://dx.doi.org/10.2139/ssrn.4399613.

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March 2021 and March 2023, representing between 300,000 and 400,000 openings per month.45
Altogether, the construction industry faces significant labor shortages, which has likely hindered
both residential and nonresidential construction alike.
In nominal terms, over the past few years, the employment cost to employers in the construction
industry (as measured by the index for the total compensation for private industry workers in
construction) has generally increased on a quarterly basis as measured by the percent change from
a year previously. However, in real terms, these costs have actually decreased each quarter from
the second quarter of 2021 to the first quarter of 2023, meaning that the cost of labor may not
currently be a major constraint to increased residential construction.46 The relatively low
employment in the construction industry combined with declines in real employment costs
indicates either that the main labor constraint to increased construction is a pool of labor that is
small relative to the demand for construction or that builders prefer lower costs but less
construction to higher costs but more construction.
The cost of inputs to residential construction has been a significant constraint for the
homebuilding industry in recent years. Prices—as measured by the percent change in the
producer price index47 from a year ago—for net input goods to residential construction rose
rapidly beginning in April 2020 and stayed elevated until 2023, when these costs began to come
down. Inflation for input goods to construction was higher than producer inflation for final
demand or headline consumer inflation during this period. Much of this inflation in inputs was
likely due to lumber supply shortages that began in 2020 as a result of supply-chain disruptions
due to the COVID-19 pandemic.48 A lumber shortage, in and of itself, is a constraint for
homebuilders in addition to the constraint of higher costs. NAHB estimated that in the 12 months
ending in April 2021, higher lumber costs added around $35,000 to the price of an average new
home and $119 to monthly rents in new multifamily buildings.49 In recent years there have been
supply bottlenecks for a variety of other materials and inputs, including energy and steel.50
Altogether, the cost and availability of inputs, including labor and building materials, have likely
significantly hindered the homebuilding industry’s ability to increase the amount and pace of
residential construction in recent years. While this trend appears to be easing, it is, as of yet,
unclear how long it will take construction to recover or if any new disruptions may occur.

Natural Disasters
Any one specific natural disaster may cause significant damage or destruction to residential
property, contributing to supply challenges in the affected market. Disasters can be localized, and
45 For job openings data, see Bureau of Labor Statistics (BLS), “Job Openings and Labor Turnover Survey,”

https://www.bls.gov/jlt/data.htm.
46 For employment cost index data, see BLS, “Employment Cost Index,” https://www.bls.gov/eci/data.htm.
47 The producer price index is a measure of the “average change over time in the selling prices received by domestic
producers for their output.” For more information, see BLS, Producer Prices, https://www.bls.gov/opub/hom/pdf/ppi20111028.pdf. The data cited uses the series for “inputs to new residential construction, excluding capital investment,
labor, and imports.”
48 For more information on lumber shortages, see CRS Report R46636, COVID-19 and the U.S. Timber Industry, by
Anne A. Riddle; and John V. Duca and Anthony Murphy, “Why House Prices Surged as the COVID-19 Pandemic
Took Hold,” Federal Reserve Bank of Dallas, December 28, 2021, https://www.dallasfed.org/research/economics/2021/
1228.
49 Paul Emrath, “Higher Lumber Costs Add More Than $35K to New Home Prices, $119 to Monthly Rent,” NAHB,
April 28, 2021, https://eyeonhousing.org/2021/04/higher-lumber-costs-add-more-than-35k-to-new-home-prices-119-tomonthly-rent/.
50 For example, see World Construction Today, “Construction Material Shortages to Continue in 2021,”
https://www.worldconstructiontoday.com/news/construction-material-shortages-to-continue-in-2021/.

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while they may not yet result in significant impacts at the national level, the threats associated
with natural disasters have been rising recently.51 Property destruction in one location can result
in distortions in other markets owing to resulting shifts in migration and demand.52 Therefore, the
more widespread these risks become, the more likely they are to result in supply disruptions at the
national level.53 Currently, a significant portion of the housing stock is vulnerable to the impacts
of flooding, storms, wildfires, and tornadoes, to name a few.54

Aging in Place Trends
Certain demographic characteristics may be affecting housing supply, particularly in owneroccupied markets. Trends such as “aging in place” may be limiting the supply of homes for sale
as the relatively large baby boomer generation maintains homeownership.55 However, by some
estimates, homeownership does not begin to drop off until past the age of 75. If this pattern holds,
a large number of homes for sale may become available in the coming years as the baby boomer
generation ages into this bracket.56 At the same time, the millennial generation, another relatively
large cohort, is largely of home-buying age, and homeownership rates for this group have
accelerated in recent years, potentially putting further strain on the supply of owner-occupied
housing.57 Other trends in household characteristics, such as declining marriage rates and birth
rates, may also be resulting in challenges to housing supply as it currently exists. (There may not
be adequate supply of smaller housing units to meet altered demand, for example.58)

Policy Considerations
To the extent that certain conditions in the housing market—notably issues surrounding
affordability and choice—are being caused by low supply, those problems are unlikely to be fixed
51 Howard Kunreuther, “Reducing Losses from Catastrophes: Role of Insurance and Other Policy Tools,” Environment:

Science and Policy for Sustainable Development, vol. 58, no. 1 (January/February 2016), pp. 30-37.
52 Tamara L. Sheldon and Crystal Zhan, “The Impact of Natural Disasters on U.S. Home Ownership,” Journal of the
Association of Environmental and Resource Economists, vol. 6, no. 6 (September 19, 2019), pp. 1169-1203,
https://www.journals.uchicago.edu/doi/full/10.1086/705398#_i18.
53 Many studies link a rise in the frequency, intensity, or magnitude of natural disasters to climate change. Other results
of climate change, such as rising sea levels, may also prove a challenge to housing supply in the long term not only
because of hazards posed to the housing stock but also because of any policies or migration that arise as a result. See
Basel Committee on Banking Supervision, “Climate-Related Risk Drivers and Their Transmission Channels,” April 14,
2021, pp. 6-7, https://www.bis.org/bcbs/publ/d517.htm; and Steven Rothstein and Joe Weisbord, Housing Finance and
Climate Risk: Taking Action in an Uncertain Future, Mortgage Bankers Association, February 16, 2023, p. 12,
https://www.mba.org/docs/default-source/research—riha-reports/24981-riha-climate-change-volume-1.pdf.
54 CoreLogic, “2021 Climate Change Catastrophe Report,” February 17, 2022, https://www.corelogic.com/pressreleases/corelogic-climate-change-catastrophe-report-estimates-1-in-10-u-s-residential-properties-impacted-by-naturaldisasters-in-2021/; and CoreLogic, “Risk Redefined: CoreLogic Climate Change Catastrophe Report Emphasizes Need
to Address Increasing Frequency of Hazard Events,” press release, January 27, 2021, https://www.corelogic.com/pressreleases/risk-redefined-corelogic-climate-change-catastrophe-report-emphasizes-need-to-address-increasing-frequencyof-hazard-events/.
55 Freddie Mac, U.S. Population Growth: Where Is Housing Demand Strongest?, January 2021, p. 4,
https://www.freddiemac.com/fmac-resources/research/pdf/202101-Insight-12.pdf.
56 Andrew Van Dam, “The Age at Which People Give Up on Homeownership, and More!,” Washington Post, April 14,
2023, https://www.washingtonpost.com/business/2023/04/14/foreign-toursts-america/.
57 Millennial homeownership rates still lag those of older generations. For example, see Freddie Mac, Millennials and
Housing, 2021, p. 4, https://sf.freddiemac.com/docs/pdf/fact-sheet/millennial-playbook_millennials-and-housing.pdf.
58 Tracy Hadden Loh and Evan Farrar, “The Great Real Estate Reset, Modernizing Family: American’s Demographics
Are Transforming, but Our Housing Supply Is Not,” Brookings Institution, December 16, 2020,
https://www.brookings.edu/essay/trend-2-americas-demographics-are-transforming-but-our-housing-supply-is-not/.

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without supply-side solutions, which happen with a lag and therefore will not be realized in the
short term. While this report has focused mainly on low supply nationally, policymakers may be
more interested in local solutions given differences in price and availability across localities.
Additionally, many housing policies are created, implemented, and regulated at the state or local
level, which restricts the ability of federal policymakers to influence housing market policy.
Nonetheless, there are certain policy options available to Congress. This section focuses
specifically on federal policy considerations for increasing supply across price points. Of note,
this section discusses certain policy options that would remove barriers to economically efficient
outcomes. Existing policies that cause certain market distortions may be desirable for other
reasons. This section does not discuss the potential benefits of such policies.

Policy Options for Lowering Cost of Inputs
The options below focus on increasing the availability, decreasing the cost, or removing barriers
to the use of land, labor, and raw materials in the construction process.

Federal Government Recommendations and Grants for Local Reform
The federal government does not have direct authority over local land use regulation. Zoning,
permitting, and land use are generally controlled by states, many of which have delegated
authority to localities.59 Federal agencies, however, can and have made recommendations related
to these issues. For example, a recent report from HUD includes the following recommendations
for local jurisdictions for pro-housing land use and zoning reforms to increase supply and
affordability: “Increase multifamily zoning; allow missing middle and larger multifamily
development by-right; enable adaptive reuse and conversions; eliminate parking requirements;
reduce minimum lot sizes; support equitable transit-oriented development; and streamline
permitting processes and timeline.”60
Some have argued that non-traditional building techniques, such as factory-built housing, are
more efficient and cost-effective than traditional building techniques, but they face regulatory
barriers and financing obstacles that have restricted their use. Past HUD recommendations on this
topic have included updating the HUD code, expanding areas zoned to accept factory-built
housing by state and local governments, and improving financing conditions by defining factorybuilt housing as real property. (For example, certain types of factory-built housing are not built on
permanent foundations and therefore may be subject to different codes and may not qualify for
typical mortgages.61)
In addition, federal programs may incentivize or encourage local reforms. For example, the
Community Development Block Grant-Pathways to Removing Obstacles62 (P.L. 117-328,
Division L, Title II) tasks HUD with awarding competitive grants to state, local, and regional
entities to remove regulatory barriers to affordable housing. HUD recently requested another $85

59 Anika Singh Lemar, “The Role of States in Liberalizing Land Use,” North Carolina Law Review, vol. 97, no. 2

(January 1, 2019), p. 297; and Harvard Law Review, “Addressing Challenges to Affordable Housing in Land Use Law:
Recognizing Affordable Housing as a Right,” Housing Law and Policy Note, February 10, 2022, p. 1107.
60 HUD Office of Policy Development and Research, Pro-Housing Land Use and Zoning Reforms, April 2023,
https://www.huduser.gov/portal/sites/default/files/pdf/policy-and-practice-publication-2023-april.pdf.
61 HUD Office of Policy Development and Research, Factory-Built Housing for Affordability, Efficiency, and
Resilience, Winter/Spring 2020, https://www.huduser.gov/portal/periodicals/em/WinterSpring20/highlight1.html.
62 Previously called the Yes In My Backyard Incentive Grant Program.

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U.S. Housing Supply: Recent Trends and Policy Considerations

million for the program in its FY2024 Congressional Budget Justification.63 Other legislation on
this topic was proposed in the 117th Congress, such as the Yes in My Backyard Act (S. 1614 and
H.R. 3198) and the Housing, Opportunity, Mobility, and Equity Act of 2022 (S. 5223 and H.R.
9466). The Biden-Harris Administration Housing Supply Action Plan to Help Close the Housing
Supply Gap in Five Years similarly included plans to “reward jurisdictions that have reformed
zoning and land-use policies with higher scores in certain federal grant processes, for the first
time at scale.”64

Incentives for the Construction Industry
Various types of incentives for the construction industry could also potentially affect the amount
of production by incentivizing hiring, training, or construction directly. For example, policies
such as the low-income housing tax credit (LIHTC), which provides tax credits to offset the cost
of producing affordable rental housing units, may increase supply in particular housing markets.65
The proposed Neighborhood Homes Investment Act (S. 657) would create similar tax credits in
owner-occupied markets.66 There is debate about whether and to what extent such policies
improve (or would improve) supply. Many spectators argue that these tax credits are an important
tool in increasing supply.67 For example, LIHTC has created about 3 million units nationwide.
Estimates vary greatly on how much LIHTC construction has crowded out private construction
and, therefore, how much overall supply has been affected.68

Improving Supply Chains
The cost and availability of materials used in the construction or renovation process have been a
constraint to housing supply at various points, as discussed earlier in the “Construction Input
Costs” section. To some extent, shocks that affect the cost and availability of inputs are
unpredictable. For example, the COVID-19 pandemic and the Russian invasion of Ukraine in
2022 both caused supply chain shocks that were not foreseeable.69 To the extent that the federal
government can reduce frictions in supply chains, such actions could potentially improve supply
conditions.70 For example, as part of the Housing Supply Action Plan, the Biden Administration
plans to “work with the private sector to address supply chain challenges and improve building
techniques” to improve the pace of construction. Trade policies also affect supply chains.

63 HUD, “Community Development Program,” Congressional Justification, FY2024, https://www.hud.gov/sites/dfiles/

CFO/documents/2024_CJ_Program_-_CDF.pdf.
64 The White House, “President Biden Announces New Actions to Ease the Burden of Housing Costs,” May 16, 2022,
https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/16/president-biden-announces-new-actions-toease-the-burden-of-housing-costs/.
65 See CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley.
66 See CRS In Focus IF11884, Neighborhood Homes Investment Act: Overview and Policy Considerations, by Mark P.
Keightley.
67 For example, see Owen Minott and Julia Selby, “The LIHTC and NHTC: Two Important Tools to Increase Housing
Supply,” Bipartisan Policy Center, October 27, 2022, https://bipartisanpolicy.org/blog/two-tools-increase-housingsupply/.
68 For more details, see CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P.
Keightley.
69 See CRS Report R46636, COVID-19 and the U.S. Timber Industry, by Anne A. Riddle; and CRS In Focus IF12104,
Russia’s 2022 War Against Ukraine: Global Economic Effects, by Andres B. Schwarzenberg.
70 The White House, “President Biden Announces New Actions to Ease the Burden of Housing Costs.” Other, more
general supply chain initiatives could have effects on housing markets. See CRS Insight IN11927, Summary of Selected
Biden Administration Actions on Supply Chains, by Lida R. Weinstock.

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U.S. Housing Supply: Recent Trends and Policy Considerations

In part, the increase in construction costs reflects market dynamics that are beyond the
government’s control, but some government policies directly contribute to costs. For example,
lowering trade barriers to material inputs in the construction process could reduce costs and
improve supply. Research suggested that 2017 tariffs on Canadian lumber increased U.S. lumber
prices.71 The NAHB expected that the 2022 decreases in lumber tariffs would improve the
volatility of lumber prices.72 While not the sole factor, the decreased tariff likely contributed to
decreasing lumber prices over the past year, as measured by the producer price index for
lumber.73

Author Information
Lida R. Weinstock
Analyst Macroeconomic Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

71 Joseph Buongiorno, “Projected Effects of US Tariffs on Canadian Softwood Lumber and Newsprint Imports: A

Cobweb Model,” Canadian Journal of Forest Research, vol. 48, no. 11 (2018), pp. 1351-1357,
https://www.fs.usda.gov/research/treesearch/58183.
72 NAHB, “Canadian Lumber Tariffs Cut by More Than Half,” August 5, 2022, https://www.nahb.org/blog/2022/08/
lumber-tariff.
73 For producer price index lumber data, see BLS, “PPI Database Commodity Data,” https://www.bls.gov/ppi/
databases/.

Congressional Research Service

R47617 · VERSION 3 · NEW 17

Introduction to U.S. Economy: Housing Market

July 2, 2019 Updated May 3, 2021 3 pages

Introduction to U.S. Economy: Housing Market
The Housing Market
Real estate and the housing market play an important role in
the U.S. economy. At the individual level, roughly 65% of
occupied housing units are owner occupied, homes are
often a substantial source of household wealth in the United
States, and housing construction provides widespread
employment. At the aggregate level, housing accounts for a
significant portion of all economic activity, and changes in
the housing market can have broader effects on the
economy.

residential investment has remained well below its peak
both in real terms and as a percentage of GDP. Despite a
steep drop in total housing spending, both in real terms and
as a percentage of GDP, spending on housing services
continued to rise as a percentage of GDP through this
period. Housing’s share of GDP has still not reached its
2005 peak.
Figure 1. Total Spending in Housing Market
As a percentage of GDP

Household Net Worth
Purchasing a home is often one of the largest investments
individuals make. Home ownership accounts for a
significant portion of households’ net worth in the United
States. As of October 2020, owner-occupied real estate
accounted for slightly more than a quarter of households’
net worth, according to Federal Reserve data. The share of
households’ net worth arising from their home has been
relatively stable over the past several years, after declining
significantly following the 2007-2009 recession.
Employment
Residential construction is a significant industry in the
United States, and it employs a large number of people. At
the peak of the housing market bubble in 2006, residential
construction employed more than 1 million individuals.
However, as a result of the housing bubble bursting and
subsequent recession, employment fell to a low of about
560,000 employees in May 2011. Since then, employment
has picked up in this industry and reached about 872,000 by
March 2021, according Bureau of Labor Statistics data.

Housing and the Broader Economy
The housing market is incorporated into gross domestic
product (GDP), the prominent measure of economic
activity, in two ways. First, GDP includes all spending on
the construction of new single- and multi-family structures,
residential remodeling, and brokers’ fees, which is referred
to as residential fixed investment. As of 2020, spending on
residential fixed investment was about $885 billion,
accounting for about 4.2% of GDP. Second, GDP includes
all spending on housing services, which includes renters’
rents and utilities and homeowners’ imputed rent and utility
payments. As of 2020, spending on housing services was
about $2.8 trillion, accounting for 13.3% of GDP. Taken
together, spending within the housing market accounted for
17.5% of GDP in 2020.
As shown in Figure 1, housing’s share of GDP has
generally trended upwards, with the notable exception of
the housing market crash in 2007. Between 2000 and 2005,
residential investment grew rapidly before declining even
more rapidly as the housing bubble burst. Since then,

Source: Bureau of Economic Analysis, National Income and Product
Accounts, Table 1.1.5, and Table 2.3.5.

Housing’s Indirect Impact on the Economy
The housing market can play an important role in the
broader economy as well, as evidenced by the housing
bubble that precipitated the recession of 2007-2009.
Housing prices can impact residential investment and
therefore affect economic growth. Rising home prices likely
encourage additional construction spending to take
advantage of higher prices, leading to more robust
economic growth. A decline in housing prices is likely to
depress construction spending, leading to more anemic
economic growth.
Fluctuations in the housing market, particularly housing
prices, can have broader effects on the economy through socalled wealth effects. An increase in housing value
encourages homeowners to spend more than they do at
other times for a variety of reasons, including higher
confidence in the economy, increased home equity for
homeowners to borrow against, and higher rental income. A
decrease in prices results in the opposite. In the United
States, consumer spending makes up roughly 70% of the
economy; therefore, changes in housing wealth can result in
significant changes in economic growth.
Monetary Policy and the Housing Market
Federal Reserve decisions may also affect the housing
market through the cost of financing a home purchase. Most
Americans take out a mortgage to purchase a home, and

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Introduction to U.S. Economy: Housing Market

mortgage debt accounts for about 70% of all household
debt. The interest rate associated with a mortgage is
partially determined by the supply and demand for loanable
funds; however, the Federal Reserve can also influence
mortgage interest rates by adjusting its benchmark interest
rate, the federal funds rate. When the Federal Reserve
decides to increase the federal funds rate, it puts upward
pressure on mortgage interest rates as well. Higher
mortgage interest rates increase the overall cost of
purchasing a home, by increasing mortgage payments.
During the 2007-2009 recession, the Federal Reserve
purposely tried to decrease mortgage interest rates more
directly by purchasing mortgage-backed securities. The
Federal Reserve took similar action during the COVID-19
pandemic, lowering the federal funds rate and increasing
purchases of mortgage-backed securities. Thirty-year
mortgage rates temporarily dropped below 3% in 2020.

levels. In 2020, both sales of existing and new houses
increased, by 5.6% and 19.3%, respectively.

Housing Market Conditions

Source: Department of Housing and Urban Development, U.S.
Housing Market Conditions.

A number of broad indicators are used to assess the housing
market. National indicators do not necessarily capture the
variation among local markets and, therefore, may not be
indicative of any one specific locality.
Figure 2. Nominal Housing Prices
Year-over-year change

Figure 3. Annual House Sales
In thousands

Residential investment, shown as a percentage of GDP in
Figure 1, is also used as a measure of the health of the
housing market. If demand for housing declines or
economic actors expect the housing market to weaken,
residential investment is likely to slow or decline, and vice
versa.
COVID-19
As evidenced by housing market conditions in Figure 2 and
Figure 3, despite increased housing insecurity caused by
the pandemic, many housing market indicators have thus
far remained strong. Contributing to rising prices and
increased sales is that housing inventory—the supply of
homes for sale/on the market—decreased, as shown in
Figure 4. Housing inventory was low even before the
pandemic, although it is possible that the pandemic
exacerbated the shortage by causing people to put off
selling their homes, in which case supply would be
expected to increase somewhat in 2021.

Source: Federal Housing Finance Agency, House Price Indexes,
Seasonally Adjusted Purchase-Only Index.

Figure 4. Housing Inventory

Housing prices are an indicator of the housing market’s
conditions and have important implications for the
economy as a whole. As shown in Figure 2, after falling
significantly during the 2007-2009 recession, average
nominal housing prices have been increasing nationally
each year since the beginning of 2012, surpassing their
previous nominal peak in the first quarter of 2016. Growth
in housing prices increased rapidly in 2020 and peaked at
10.8% growth in the fourth quarter, likely due in part to low
mortgage rates.
Another common indicator of the health of the housing
market is home sales. Increasing home sales are generally
viewed as a sign of a strong housing market and a strong
economy, as it suggests individuals have both the income to
make the purchase and a positive economic outlook. As
shown in Figure 3, during the 2007-2009 recession, home
sales fell dramatically. Home sales began to recover in 2011
and 2012 but have still not recovered to pre-recession

Source: Department of Housing and Urban Development, U.S.
Housing Market Conditions.

(Note: This In Focus was originally authored by Jeffrey
Stupak, former CRS Analyst in Macroeconomic Policy.)
Lida R. Weinstock, Analyst in Macroeconomic Policy
IF11327

https://crsreports.congress.gov

Introduction to U.S. Economy: Housing Market

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permissio n of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF11327 · VERSION 9 · UPDATED

The U.S. “Housing Recession”

August 21, 2023 4 pages

INSIGHTi

The U.S. “Housing Recession”
August 21, 2023
Economists often look to the housing market as an indicator of the health of the economy. As the COVID19 pandemic accelerated, the housing market was relatively strong, characterized by robust demand,
rising prices, and increased construction. Since the latter half of 2021, spending on residential
construction has faltered, leading some to believe that the United States is or was in a “housing
recession.” Some have speculated that lower spending in the housing sector is a sign that overall spending
in the economy will decrease and that a housing recession will lead to an actual recession. This Insight
discusses the concept of a housing recession, reviews housing market trends, and considers the extent to
which housing market conditions may affect the broader economy.

Background and Trends
Economists use the phrase housing recession to refer to a downturn in the housing market. While many
housing market indicators are considered in general discussions of housing recessions, for the purposes of
this Insight, a housing recession will be defined by the amount of and spending on residential
construction.
Despite high home prices and rents, homebuilding has slumped. One of the main ways economists
measure spending in the housing market is by tracking private fixed residential investment, a component
of gross domestic product (GDP). Private fixed residential investment includes all spending on the
construction of new single- and multi-family structures (both owner-occupied and rental), residential
remodeling, and brokers’ fees. This measure allows economists to not only track spending on housing but
also tie it directly to overall economic activity. As shown in Figure 1, below, residential investment has
been falling each quarter since the second quarter of 2021, most recently falling by 1.1% in the second
quarter of 2023. Decreases in 2023 have been smaller than those throughout 2022, but as a result of nine
straight quarters of decline, the level of residential investment is now about $167 billion less in real terms
than it was in the first quarter of 2021. By this measure, one could assert that the United States is
experiencing a housing recession.

Congressional Research Service
https://crsreports.congress.gov
IN12227
CRS INSIGHT
Prepared for Members and
Committees of Congress

Congressional Research Service

Figure 1. Real Private Fixed Residential Investment
Seasonally Adjusted Annual Rate (SAAR), Q1 2014-Q2 2023

Source: Bureau of Economic Analysis.

In addition to looking at dollars spent on residential construction, economists can consider the amount of
planned, current, or completed construction. To that end, Figure 2 below shows three-month rolling
averages for new authorizations (units that have been approved via issuance of building or zoning
permits), starts (units for which excavation for footings or foundations has begun), and completions (units
that have had all finished flooring installed). Each of these measures can give a sense of homebuilders’
sentiment at different points in time: Authorizations are driven by expectations of what the market will be
like in the medium to longer term (authorizations represent the first step that allows building but do not
indicate that building has actually started), starts are driven by near-term expectations, and completions
signal what expectations were in the recent past (it takes time to finish building once started).
Authorizations and starts decreased throughout 2022 while completions rose, indicating activity in and the
outlook for the market was turning negative at that time. However, all three measures increased on
average over the first six months of 2023. Overall, the evidence of a housing recession using these
measures is mixed and could indicate a housing recession in 2022 but not 2023. The upward trend in
starts, in particular, would indicate that homebuilders are optimistic about the housing market in the
coming months.

Congressional Research Service

Figure 2. New Privately Owned Housing Unit Construction
3-Month SAAR Rolling Average, January 2014 to June 2023

Source: Census Bureau.

Will a Housing Recession Lead to an Economic
Recession?
Given that there is some evidence that the United States experienced a housing recession, at least in 2022,
the question arises: Will a housing recession lead to an economic recession? Many economists pay
particular attention to the housing sector when considering the probability of a recession, because housing
market contractions have often preceded recessions. (Decreases in nominal residential investment have
preceded nine out 12 recessions since 1947.) Given that many economists had already been concerned
about the economy’s reaction to the Federal Reserve’s interest rate hikes, the contraction in housing
spending could be seen as an indication that the economy will face a similar contraction. However,
despite the Fed’s aggressive rate hikes since March 2022 and the apparent housing recession, the
economy remains fairly robust. The labor market remains tight, real GDP growth continues to outperform
expectations, and inflation—while still above the Fed’s target of 2%—is significantly lower than last
year’s high. While many economists had previously been predicting recession in 2023, many now believe
the economy will not contract this year.
Why has the contraction in spending in the housing market not led to a recession? One answer is that a
recession just has not happened yet. While GDP largely beat expectations in the second quarter,
residential investment underperformed, continuing to decrease quarter over quarter. Perhaps the housing
recession has not passed and an economic recession is on the horizon.
Another possibility is that a housing recession has already passed and the economy was able to weather
the contraction. Combined with the increased pace of construction, the recent decline in the rate of
decrease in residential investment could signal that housing has turned a corner. Some also cite improved
supply chains and builder sentiment as evidence for improving housing conditions.
If it is true that the economy weathered this housing slowdown, it could support an assertion made by
some observers that the housing sector and larger economy are less connected than they once were. What

Congressional Research Service

happens in the economy may not have an outsized effect on the housing market and vice versa. For
example, according to Fannie Mae, new home construction may not be as rate-sensitive as it has been
historically, with new construction being driven by low supply that has been consistently lagging demand
despite higher mortgage rates.

Author Information
Lida R. Weinstock
Analyst Macroeconomic Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

IN12227 · VERSION 1 · NEW

Ownership of the U.S. Rental Housing Stock
by Investor Type: In Brief

December 13, 2022 8 pages

Ownership of the U.S. Rental Housing Stock
by Investor Type: In Brief
December 13, 2022

Congressional Research Service
https://crsreports.congress.gov
R47332

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

Contents
Summary of the 2020 Rental Housing Ownership Data ……………………………………………………….. 1
Selected Key Data Observations and Considerations……………………………………………………………. 2
Rental Housing Ownership Data ……………………………………………………………………………………….. 2
Rental Property Ownership …………………………………………………………………………………………. 3
Rental Unit Ownership ……………………………………………………………………………………………….. 4

Tables
Table 1. Number of Rental Properties by Ownership and Size, 2020 ……………………………………… 3
Table 2. Share of Rental Properties by Ownership and Size, 2020 …………………………………………. 3
Table 3. Number of Rental Units by Ownership and Size, 2020 …………………………………………….. 4
Table 4. Share of Rental Units by Ownership and Size, 2020 ………………………………………………… 5

Contacts
Author Information………………………………………………………………………………………………………….. 6

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

n November 29, 2022, the U.S. Department of Housing and Urban Development (HUD)
and the U.S. Census Bureau (Census) released data from the 2021 Rental Housing
Finance Survey (RHFS), a triennial survey of the residential rental housing stock in the
United States.1 The 2021 RHFS provides information on the rental housing stock in 2020,
including information on ownership, management, housing configuration and amenities, finances,
and government subsidies. Data are available on both rental properties (i.e., one or more buildings
commonly financed) and units (i.e., individual residences).

This report uses the 2021 RHFS data to examine the profile of investors that owned rental
housing in 2020. It first presents selected statistics that summarize the investor landscape,
followed by selected key observations and considerations. More detailed data from which these
statistics and observations are derived are presented in Table 1 through Table 4. These nationally
aggregated data may not match the ownership landscape in a given local housing market. An
online table creator provided by Census allows users to explore the 2021 RHFS data along other
dimensions.2

Summary of the 2020 Rental Housing Ownership
Data
Selected statistics that summarize rental property ownership in 2020 include the following:












There were 19.3 million rental properties, 85.6% of which were single unit
properties.
There were 49.5 million rental units, 33.4% of which were located in single unit
properties and 33.1% of which were located in properties with 150 units or more.
The remaining third of units were located in properties with between 2 and 149
units.
Individual investors owned 70.2% of rental properties.
Individual investors owned 37.6% of rental units, but owned 70.2% of rental
units located in properties with four or fewer units.
Limited liability partnerships (LLPs), limited partnerships (LPs), and limited
liability corporations (LLCs) owned 15.4% of rental properties.
LLPs, LPs, and LLCs owned 40.4% of rental units, but owned 67.8% of units
located in properties with 100 or more units.
Real estate investment trusts (REITs) and real estate corporations combined to
own 1.2% of rental properties and 4.3% of rental units.
The remaining forms of ownership combined to own 8.7% of properties. These
forms include trustee for estate (2.7%), tenant in common (2.6%), general
partnership (0.7%), housing cooperative organization (0.05%), nonprofit
organization (1.4%), and other (1.3%).
The remaining forms of ownership combined to own 9.2% of rental units: trustee
for estate (2.1%), tenant in common (1.2%), general partnership (1.7%), housing

1 U.S. Department of Housing and Urban Development, “HUD and Census Bureau Release Findings of 2021 Rental

Housing Finance Survey,” press release, November 29, 2022, https://www.hud.gov/press/
press_releases_media_advisories/HUD_No_22_242.
2 See U.S. Department of Housing and Urban Development and U.S. Census Bureau, Rental Housing Finance Survey,
RHFS Table Creator, https://www.census.gov/data-tools/demo/rhfs/#/.

Congressional Research Service

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief



cooperative organization (0.1%), nonprofit organization (2.3%), and other
(1.7%).
The nonresponse rate to property ownership was 4.5%; it was 8.5% for unit
ownership.

Selected Key Data Observations and Considerations
Selected key observations and considerations about the 2020 rental housing investor landscape
include the following:








Individual investors and LLPs, LPs, and LLCs combined to own the largest
shares of the rental housing stock (85.6% of properties and 78.0% of units).
LLPs, LPs, and LLCs are not typically subject to the federal corporate tax.
Instead, income “passes through” these businesses to the individual owners, who
pay taxes on the income according to the individual income tax system.3
Individual investors tend to have the largest ownership shares in smaller-sized
properties (i.e., properties with fewer units), while LLPs, LPs, and LLCs tend to
have the largest ownership shares in larger-sized properties.
Some investors classified as either an LLP, LP, or LLC may be individual owners
who have structured their ownership through one of these business forms rather
than “larger” or “institutional” investors operating in one of these forms.
Some owners more typically thought of as individual or “small” investors may
fall under the tenant in common classification. Tenancy in common is one way
multiple investors in the same property can choose to collectively own the
property, and which determines how an individual investor’s ownership shares
are dealt with upon death of the investor.
REITs and real estate corporations have a relatively small ownership share
nationally, but could have a significant presence in certain markets.
A REIT is a company that would otherwise be taxed as a corporation except that
it meets certain requirements, mainly that most of its assets and income are
invested in and derived from real estate, and that it distributes nearly all of its
profits to shareholders.

Rental Housing Ownership Data
Presented below are the full 2021 RHFS data on 2020 property and unit ownership as constructed
from the Census’s online table creator.4 Presented first are the data on the number and share of
properties by ownership type and size of the property, followed by the data on the number and
share of units by ownership type and size of the property.

3 For more information on the tax treatment of businesses, see CRS Report R43104, A Brief Overview of Business

Types and Their Tax Treatment, by Mark P. Keightley.
4 See U.S. Department of Housing and Urban Development and U.S. Census Bureau, Rental Housing Finance Survey,
RHFS Table Creator, https://www.census.gov/data-tools/demo/rhfs/#/.

Congressional Research Service

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

Rental Property Ownership
Table 1. Number of Rental Properties by Ownership and Size, 2020
Number of Properties by Units in Property (in thousands)
Current
Ownership of
Property

All

Total

1 unit

2 to 4
units

5 to 24
units

25 to 49
units

50 to 99
units

100 to
149
units

150
units or
more

19,328

16,550

2,215

419

Individual
investor

13,572

12,003

1,422

130

Trustee for
estate

517

341

154

LLP, LP, or
LLC

2,982

2,362

354

185

Tenant in
common

503

483

General
partnership

134

Real Estate
Investment
Trust (REIT)

121

110

Real estate
corporation

113

Housing
cooperative
organization

Nonprofit
organization

268

224

Other

242

180

Not reported

868

690

128

Source: U.S. Department of Housing and Urban Development and U.S. Census Bureau, Rental Housing Finance
Survey, 2021.
Note: According to the Glossary of RHFS Terms, “a property includes all housing units and structures
commonly financed. A property may consist of one building at one address, or a property may consist of more
than one building or more than one street address, if these structures are commonly owned and financed,
geographically proximate, and considered part of the same property.” See U.S. Department of Housing and
Urban Development and U.S. Census Bureau, 2021 Rental Housing Finance Survey Glossary of Terms,
https://www2.census.gov/programs-surveys/rhfs/technical-documentation/glossary/2021/2021-RHFS-Glossary-524-21.pdf.

Table 2. Share of Rental Properties by Ownership and Size, 2020
Share of Properties by Units in Property (percentage)
Current
Ownership
of Property
Total

All

1 unit

2 to 4
units

100.0%

Congressional Research Service

5 to 24
units

25 to 49
units

50 to 99
units

100 to
149
units

150
units or
more

100.0%

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

Individual
investor

70.2%

72.5%

64.2%

31.0%

16.0%

6.7%

9.1%

4.4%

Trustee for
estate

2.7%

2.1%

7.0%

4.5%

2.7%

0.0%

LLP, LP, or
LLC

15.4%

14.3%

16.0%

44.2%

49.3%

53.3%

54.5%

66.7%

Tenant in
common

2.6%

2.9%

0.9%

0.2%

0.0%

General
partnership

0.7%

0.6%

1.2%

1.9%

4.0%

6.7%

0.0%

2.2%

Real Estate
Investment
Trust (REIT)

0.6%

0.7%

0.3%

0.5%

0.0%

4.4%

Real estate
corporation

0.6%

0.4%

1.4%

3.3%

5.3%

6.7%

9.1%

4.4%

Housing
cooperative
organization

0.05%

0.0%

0.4%

0.0%

Nonprofit
organization

1.4%

0.7%

4.5%

6.7%

9.1%

2.2%

Other

1.3%

1.1%

2.3%

1.7%

2.7%

0.0%

2.2%

Not reported

4.5%

4.2%

5.8%

7.6%

12.0%

13.3%

9.1%

13.3%

Rental Unit Ownership
Table 3. Number of Rental Units by Ownership and Size, 2020
Number of Units by Units in Property (in thousands)
Current
Ownership
of Property

All

Total

1 unit

2 to 4
units

5 to 24
units

25 to 49
units

50 to 99
units

100 to
149
units

150
units or
more

49,547

16,550

6,065

5,470

2,725

1,055

1,296

16,387

Individual
investor

18,635

12,003

3,878

1,364

415

796

Trustee for
estate

1,043

341

377

197

LLP, LP, or
LLC

20,022

2,362

1,043

2,683

1,335

614

758

11,225

Congressional Research Service

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

Tenant in
common

598

483

General
partnership

820

132

101

310

Real Estate
Investment
Trust (REIT)

794

110

610

Real estate
corporation

1,351

192

157

737

Housing
cooperative
organization

Nonprofit
organization

1,159

224

275

196

101

256

Other

861

180

115

104

312

Not reported

4,200

690

346

477

332

127

189

2,039

Source: U.S. Department of Housing and Urban Development and U.S. Census Bureau, Rental Housing Finance
Survey, 2021.
Note: According to the Glossary of RHFS Terms, a unit is “A house, an apartment, a mobile home or trailer, a
group of rooms, or a single room occupied as separate living quarters, or if vacant, intended for occupancy as
separate living quarters.” See U.S. Department of Housing and Urban Development and U.S. Census Bureau,
2021 Rental Housing Finance Survey Glossary of Terms, https://www2.census.gov/programs-surveys/rhfs/technicaldocumentation/glossary/2021/2021-RHFS-Glossary-5-24-21.pdf.

Table 4. Share of Rental Units by Ownership and Size, 2020
Share of Units by Units in Property (percentage)
Current
Ownership
of Property

5 to 24
units

25 to 49
units

50 to 99
units

100 to
149
units

150
units or
more

All

1 unit

2 to 4
units

Total

100.0%

Individual
investor

37.6%

72.5%

63.9%

24.9%

15.2%

9.4%

6.3%

4.9%

Trustee for
estate

2.1%

6.2%

3.6%

2.5%

0.1%

0.5%

0.3%

LLP, LP, or
LLC

40.4%

14.3%

17.2%

49.0%

58.2%

58.5%

68.5%

Tenant in
common

1.2%

2.9%

1.0%

0.3%

0.1%

0.0%

0.2%

General
partnership

1.7%

0.6%

1.4%

2.4%

3.7%

3.5%

4.6%

1.9%

Real Estate
Investment
Trust (REIT)

1.6%

0.7%

0.3%

0.4%

0.8%

1.2%

3.7%

Real estate
corporation

2.7%

0.4%

1.4%

3.5%

5.8%

5.2%

5.0%

4.5%

Housing
cooperative
organization

0.1%

0.0%

0.4%

0.2%

0.4%

0.0%

0.2%

0.1%

Congressional Research Service

Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief

Nonprofit
organization

2.3%

1.4%

0.5%

5.0%

7.2%

7.1%

7.8%

1.6%

Other

1.7%

1.1%

1.9%

3.4%

3.7%

1.5%

1.9%

Not reported

8.5%

4.2%

5.7%

8.7%

12.2%

12.0%

14.6%

12.4%

Author Information
Mark P. Keightley
Specialist in Economics

Congressional Research Service

R47332 · VERSION 2 · NEW

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Housing Issues in the 118th Congress

U.S. Housing Supply: Recent Trends and Policy Considerations

Introduction to U.S. Economy: Housing Market

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Ownership of the U.S. Rental Housing Stock
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