Estimates from experts range from 2 million to 20 million homes needed to “fix” the shortage. Moody’s and Freddie Mac aim low; McKinsey and congressional Republicans aim high. But the gap reflects less about data accuracy and more about what we believe constitutes a healthy housing market: Should it restore the vacancy rates of 2006? Mirror household formation from the 1980s? Include enough homes to support millennial independence, second homes, and homeless services?
As The Washington Post recently documented, these competing frameworks offer radically different conclusions about supply needs. Some models factor in “doubled-up” households—people sharing homes who would prefer their own if costs allowed. Others assume a target vacancy rate (say, 10%) to keep rents stable. Still others benchmark affordability itself, estimating how much new construction would be required to make ownership as feasible as it was in 1995.
This variation matters. Cities looking to reform zoning or streamline permitting need clarity on what success looks like. But if no one agrees whether we’re short by 2 million or 20 million homes, it’s hard to frame a coherent policy response.
The highest estimates come from analysts who ask: What would housing supply look like without regulatory constraint? The Joint Economic Committee’s Republican staff calculated how many homes would exist if land value aligned with free-market ratios—roughly 20% of total home cost. By that logic, if housing prices are inflated by zoning and permitting bottlenecks, then building 20 million more homes isn’t just desirable—it’s necessary.
Others, including Kevin Erdmann, argue that historical spending data shows we’re chronically underbuilding. Adjusted for inflation, per-capita housing construction spending has fallen 23% since 1990. If spending had kept pace, the U.S. would have 40 million more homes—not 4 or 5 million. While Erdmann stops short of endorsing that number, he does suggest current estimates are far too modest.
Of course, not everyone agrees there’s a shortage at all. Researchers like Kirk McClure argue the problem lies in distribution, not supply. From his view, the U.S. has built enough homes overall but too few at lower price points. Raising wages, he contends, may be more cost-effective than building new inventory.
Still, this perspective glosses over why so many young adults remain in their childhood bedrooms. Pew Research found that 18% of adults aged 25 to 34 live with their parents—more than double the share from the 1970s. Most would move out if housing costs were lower. Whether we call that a supply shortage or an affordability crisis, it signals unmet demand.
For municipal leaders, the real takeaway is this: any meaningful improvement in affordability will require building more homes. Whether your city’s true shortfall is 3 million or 13 million doesn’t change the next step—modernizing outdated land-use codes, reducing permitting delays, and legalizing the kinds of housing people need.
Even partial progress can ease the squeeze. The Joint Economic Committee analysis found that building just 2.7 million homes—far less than their full estimate—would lower prices enough to unlock ownership for 5 million more Americans.
That kind of change doesn’t require solving a national math problem. It requires cities to start where they are and act accordingly.