The Housing Affordability Crisis: Causes and Evidence

The housing affordability crisis is the widening gap between what homes cost and what American households earn. Its clearest symptom is that tens of millions of households spend more than they can comfortably afford on rent or a mortgage. Harvard’s Joint Center for Housing Studies (JCHS) reported that 22.7 million renter households, nearly half of all renters, were cost-burdened in 2024. So were 20.7 million homeowners.

The evidence points to several causes acting together rather than one villain. The country has built fewer homes than it needs for more than a decade. Wages at the bottom of the labor market have not kept pace with rents. Local land-use rules limit what can be built and where. And building itself has become more expensive. Researchers agree on the broad picture, but they still debate how much each factor matters. This guide walks through the data behind each one.

How Affordability Is Measured

The standard yardstick is the 30% rule. A household that spends more than 30% of its gross income on housing costs, including utilities, is cost-burdened. One that spends more than 50% is severely cost-burdened. The thresholds are crude, since they treat a high earner and a low earner the same, but they are used by HUD, the Census Bureau, and nearly every major research group. That consistency makes it possible to compare places and track change over time.

Programs also measure need against area median income (AMI), the midpoint income for a region. Households at or below 30% of AMI, or the federal poverty guideline if that is higher, are classed as extremely low income. They are the group the private market serves worst.

Who Is Cost-Burdened

The most recent national figures come from two sources that use slightly different data years.

Harvard JCHS, State of the Nation’s Housing 2026 (data for 2024):

• 22.7 million renter households (49%) were cost-burdened, the highest number on record.
• 12.1 million renter households (26%) were severely cost-burdened.
• Among renters earning less than $30,000 a year, 83% were cost-burdened and 67% were severely burdened.
• 20.7 million homeowners, or 24%, spent more than 30% of their income on housing.

Congressional Research Service (data for 2023):

• 49.5% of renter households and 23.6% of owner households were cost-burdened.
• Every year from 2006 to 2023, between 46.3% and 50.7% of renters were cost-burdened. High renter burdens are long-running, not just a pandemic-era spike.
• Renters headed by an older adult or a person with a disability faced higher rates than renters overall.
• Urban renters were more likely to be burdened (49.9%) than rural renters (34.3%).

HUD tracks a narrower measure called worst case housing needs: very low-income renters who receive no housing assistance and either pay more than half their income for rent, live in severely inadequate housing, or both. HUD’s 2025 report to Congress counted 8.46 million such households in 2023, close to the record 8.53 million it found for 2021.

How Big Is the Shortage?

A housing shortage estimate tries to answer a deceptively simple question: how many more homes would the country need for supply to match demand at normal vacancy levels? There is no official federal number. Private and nonprofit analysts each make their own assumptions about how many households “should” exist and how many vacant homes a healthy market needs. That is why the estimates differ.

A few patterns stand out:

• Several estimates sit near 4 million, but the full range is wide. Three groups using different methods landed between 3.7 and 4.0 million homes for 2023 through 2025. JCHS noted in its 2026 report that estimates from various organizations run from 1.2 million to 5.5 million units.
• The trend is mixed. Up for Growth found the gap shrank by about 70,000 homes between 2022 and 2023. Freddie Mac’s estimate slipped from 3.8 million (Q4 2020) to 3.7 million (Q3 2024), a change it attributed to assuming a lower target vacancy rate. Realtor.com’s gap narrowed to 3.8 million in 2024, when more than 1.6 million homes were completed, the most in nearly 20 years. It widened again to 4.03 million in 2025 as household formation outpaced housing starts. JCHS, looking only at vacancy rates, estimated that the shortfall of vacant homes fell from about 1.5 million in 2022 to about 600,000 in early 2026.
• The NLIHC number answers a different question. It counts homes affordable to the poorest renters, not homes overall. Even in a market with enough total units, many would rent for far more than extremely low-income households can pay. NLIHC found only 35 affordable and available rental homes for every 100 such households in 2024, and no state or large metro area had enough.

Wages Versus Rents

NLIHC’s annual Out of Reach report calculates a Housing Wage: the hourly pay a full-time worker needs to afford a modest home at HUD’s Fair Market Rent without spending more than 30% of income.

According to Out of Reach 2026:

• The national Housing Wage is $34.73 an hour for a two-bedroom rental and $29.19 for a one-bedroom.
• The average renter earns $24.84 an hour, which is $9.89 short of the two-bedroom figure.
• A full-time worker at the 10th percentile of wages earns $15.01 an hour and can afford about $781 a month. That compares with national Fair Market Rents of $1,518 for a one-bedroom and $1,806 for a two-bedroom.
• Of the 25 most common occupations in the United States, 18 pay median wages below the two-bedroom Housing Wage. Those 18 occupations employ more than 74 million people.
• Nowhere in the United States can a full-time worker earning the local minimum wage afford a modest two-bedroom home at Fair Market Rent.

To put the national two-bedroom figure in annual terms: $34.73 an hour for 2,080 hours (40 hours a week, all year) comes to about $72,000. At the federal minimum wage of $7.25, the same rent would take roughly 192 hours of work a week, more than the 168 hours a week contains.

That is why the crisis reaches into workforce housing. Teachers, nurses’ aides, retail workers, and construction workers often earn too much for deep subsidies but too little to rent near their jobs without strain.

Why Supply Has Lagged: Zoning and Land-Use Rules

Most decisions about what can be built in the United States are made locally, through zoning codes and permitting. Several common rules limit how many homes fit on a given piece of land:

• Single-family zoning, which allows only one detached house per lot across large parts of many cities.
• Minimum lot sizes, which require each home to sit on a set amount of land.
• Parking minimums, which require a set number of spaces per unit, using land and money that could otherwise go to housing.
• Discretionary review and local opposition, often called NIMBY (“not in my backyard”) resistance, which can delay or block projects.

How much do these rules cost? Evidence varies in quality:

• A 2022 survey of 49 multifamily developers by the National Multifamily Housing Council and the National Association of Home Builders (NAHB), both industry groups, estimated that regulations at all levels of government account for an average of 40.6% of multifamily development costs. Three-quarters of respondents reported NIMBY opposition, which they said added an average of 5.6% to costs and 7.4 months of delay. The same survey found that 47.9% of developers said they avoid building where inclusionary zoning applies. Because the respondents have a stake in the answer, these figures are best treated as a developer-side view.
• A 2023 peer-reviewed study led by Urban Institute researchers examined land-use reforms in U.S. cities from 2000 to 2019. Reforms that loosened restrictions were associated with a 0.8% increase in housing supply within three to nine years, mostly at the higher end of the rent range. The authors found no statistically significant increase in lower-cost units. Reforms that tightened restrictions were associated with higher median rents and fewer units affordable to middle-income renters.
• Research by economists at the Upjohn Institute and the Federal Reserve Bank of Philadelphia found that new market-rate apartment buildings in lower-income neighborhoods lowered nearby rents by 5% to 7%.

Taken together, the research suggests zoning reform is a slow, cumulative lever. It can add supply and ease prices over time, but it does not produce cheap homes overnight.

Why Supply Has Lagged: The Cost of Building

Even where building is allowed, a project’s expected revenue has to cover its costs. NAHB’s Construction Cost Survey found that in 2024 construction costs made up 64.4% of the average sales price of a new single-family home. That is the highest share since the series began in 1998. The finished lot accounted for 13.7%, and the average builder profit margin was 11.0%.

Other costs layer on top. Local impact fees pay for roads, schools, and utilities. Higher interest rates raise both construction loans and buyers’ mortgages. Labor and materials prices also move with the wider economy. The guide to building costs covers these in more detail.

For the lowest-income renters, NLIHC notes, the rents they can afford are generally too low to cover the cost of new construction or even to maintain existing buildings without subsidy. That is why most new homes affordable at the bottom of the income scale rely on programs such as the Low-Income Housing Tax Credit or rental assistance like the Housing Choice Voucher Program. Only about one in four income-eligible households receives federal rental assistance, according to both NLIHC and JCHS.

Where Researchers Disagree

The supply-shortage story is the dominant explanation, but it is not the only one.

• Supply versus income growth. A 2025 working paper published by the National Bureau of Economic Research, by economists Schuyler Louie, John Mondragon, and Johannes Wieland, found that from 2000 to 2020, cities with faster income growth saw similar growth in prices, housing quantity, and population regardless of how restrictive their supply was estimated to be. The authors argue that supply constraints explain less of the difference in prices across cities than commonly assumed. That finding runs against the prevailing view in the field, and the debate is ongoing.
• Demand-side factors. HUD’s 2025 Worst Case Housing Needs report attributes part of recent demand growth to immigration, pointing to an increase of more than 6 million in the foreign-born population between 2021 and 2024. JCHS reported that net international migration then fell by more than half, from 2.7 million in 2024 to 1.3 million in 2025. Realtor.com, by contrast, points to roughly 1.8 million millennial and Gen Z households that it estimates were missing in 2025, partly because housing was unaffordable. The relative weight of each factor is contested.
• Incomes, not only prices. Advocates for low-income renters, including NLIHC, stress that the deepest burdens fall on households whose incomes are simply too low for any unsubsidized home. In their view, more construction is necessary but not sufficient, and rental assistance has to be part of the answer.

These views are not mutually exclusive. Many researchers see the crisis as a supply problem in high-demand regions, an income problem for the lowest earners, and a cost problem everywhere. Preserving older, lower-rent homes, often called naturally occurring affordable housing, is another strategy many of them share.

The Bottom Line

The U.S. housing affordability crisis is well documented. Nearly half of renters were cost-burdened in 2024, several recent estimates put the national shortage near 4 million homes, and the average renter’s wage falls well short of what a modest two-bedroom costs. Restrictive zoning and rising construction costs help explain why supply has lagged. Wages and demand matter too, and the lowest-income renters need more than new construction alone can provide.