US housing supply gap widens further in 2025, Realtor.com says

WASHINGTON, March 3 (Reuters) – The U.S. housing supply gap widened further in 2025 while more households were formed, an independent report showed on Tuesday, suggesting that many potential homeowners will remain sidelined from the market.

Realtor.com said in its 2026 Housing Supply Gap report the supply deficit widened to an estimated 4.03 million homes last year from 3.80 million in 2024. Approximately 1.41 million households were formed, compared to roughly 999,000 in 2024.

An estimated 1.359 million housing units were started in 2025, down 0.6% from 2024, the government estimated last month. About 1.498 million housing units were completed in 2025, down 7.9% from 2024, it said.

Realtor.com said the housing shortfall added to more than a decade of underbuilding that has constrained supply, fueled house price inflation and pushed homeownership further out of reach, especially for younger people.

“A supply gap exceeding 4 million homes underscores how deeply rooted the shortage has become,” said Danielle Hale, chief economist at Realtor.com. “Without a sustained and targeted increase in housing supply, particularly in areas with strong job growth and persistent demand, affordability challenges will continue to sideline many would-be buyers.”

Lack of housing affordability has become a hot-button issue ahead of the midterm elections in November. The Trump administration has implemented a raft of measures, including purchases of mortgage-backed securities and banning institutional investors from buying single-family homes.

Though mortgage rates have declined significantly this year, economists see limited scope for further decreases, citing concerns about the national debt and high inflation.

Mortgage rates track U.S. Treasury yields, which spiked on Monday as Israeli and U.S. strikes on ​Iran and retaliation by Tehran sent oil prices soaring.

President Donald Trump’s aggressive trade and immigration policies, which have raised prices for building materials and appliances and undercut labor supply, are constraining builders’ ability to break ground on new single-family housing projects, economists and trade groups say. Building lots also are scarce amid state and local government regulations.

Realtor.com said affordability remained a key barrier. It said though the minimum recommended income to purchase a median-priced starter home was about $8,000 lower at $86,000 in 2025 compared to 2024, it was still above the earnings of many younger households.

“The median down payment reached $30,400, representing 14.4% of the purchase price, and it would take a median-income household seven years to save for a typical down payment at today’s saving rates,” it said.

(Reporting by Lucia Mutikani; Editing by Paul Simao)