Core Insights - The U.S. housing supply gap has widened to an estimated 4.03 million homes in 2025, up from 3.8 million in 2024, indicating a persistent shortage driven by underbuilding and high demand from younger households [1][2][3] Housing Supply and Demand - In 2025, approximately 1.41 million households were formed, while only 1.36 million housing starts occurred, resulting in an annual shortfall of about 50,000 units [2] - The supply gap exceeding 4 million homes highlights the deep-rooted nature of the housing shortage, which has been exacerbated by over a decade of underbuilding [3] - 2025 marks the third-largest annual deficit since 2012, with structural imbalances between supply and demand becoming more pronounced [3] Young Households and Affordability - The report identifies 1.82 million Millennial and Gen Z households as "missing" in 2025, the highest count in four years, largely due to high housing costs and limited supply [4] - The minimum recommended income to purchase a median-priced starter home in 2025 was approximately $86,000, which remains above the earnings of many younger households [5] Regional Supply Gaps - The South has the largest cumulative deficit at 1.62 million homes, followed by the Northeast (952,000), Midwest (865,000), and West (660,000) [9] - The Northeast, despite facing the most acute shortage relative to construction since 2012, saw improvements in both missing young households and overall supply gap in 2025 [10] Construction Trends - Approximately 1.5 million homes were completed in 2025, which is elevated by historical standards but below the pace of 2024 [12] - Builders are facing challenges such as zoning restrictions, permitting hurdles, labor shortages, and elevated material costs, which continue to limit construction activity [13] Long-term Outlook - Even under an optimistic scenario where construction increases by 50% from the 2025 pace, it would take roughly seven years to eliminate the current housing deficit [14][15] - The "Let America Build" campaign by Realtor.com emphasizes the need for policy and regulatory reform to expand housing supply and address affordability challenges [15]