Mid-year update on the housing market, by the numbers

In this year’s general election campaign, housing is receiving increased attention as affordability becomes an inescapable issue for many households in the U.S.

“We face a very significant housing supply shortfall that has been building for a long time,” said Treasury Secretary Janet Yellen on Monday. “This supply crunch has led to an affordability crunch.”

To understand how we got here, we break down 7 key dynamics and their historical trends you need to know, contributing to the critical state of housing in 2024 ⬇

Housing distribution

Status: Steady

• Among the 146 million housing units in the U.S. today, approximately 131 million of them are occupied.   

• Following a distribution that’s remained largely the same for decades, 66% of occupied units are owned and 34% of occupied units are rented.

• Of the 45 million occupied rental units, 68% are multi-family, manufactured, and mobile units, totaling 31 million. The remaining 32% are single-family rental (SFR) homes, totaling just over 14 million.

💡: There are more vacant homes than occupied rental homes today. The U.S. Census Bureau has a broad definition of what it considers a “vacant home,” but most of these are units used as a second or vacation home, like part-time residences, hunting cabins, beach houses, and timeshares that remain unoccupied for most of the year. The highest level of vacancy recorded this century was in 2009, at 19 million units. The lowest were in 2000 and 2020, both at around 13 million units.

Sources: FRED, U.S. Census Bureau

Homeownership

Status: Steady

• The U.S. homeownership rate has ranged between 62% and 69% since the 1960s, remaining relatively stable for over 50 years with only minor fluctuations.

• It peaked during the housing bubble of the early aughts, then fell after the 2008 financial crisis, returning to 65.4% by 2010.

• Since 2020, it’s remained higher than the previous 4 years. The homeownership rate in 1Q24 was the same as in 1Q12, when the SFR industry emerged. 

💡: Prior to the 1960s, homeownership rates were much lower. Between 1890 and 1940, they didn’t exceed 50%. During the 1940-1960 period, they rose significantly from 43.6% to 61.9%, propelled by higher incomes, mortgage financing, the GI bill of rights, improved interurban transportation, and the development of large-scale subdivisions.

Sources: FRED, HUD

Rental homes

Status: Low

• Between 2003 and 2006, the share of renter households remained low as more people bought homes during the housing bubble. After the 2008 bust, the lingering effects of the housing crisis resulted in a greater number and share of households renting their home, peaking in the mid-2010s.

• Both have been declining since. In 2024, SFRs represent 9.9% of all housing units in America, down from 11.5% in 2015. That means there are fewer SFRs available relative to total inventory now than 10 years ago.

• The overwhelming majority of these rental homes are owned by individuals and mom-and-pop investors. Large investors with 1K+ properties own just 500,000 or 0.3% of the total housing inventory.

💡: Growing build-to-rent development today is adding much-needed rental supply. Nationally, about 27,500 built-to-rent homes were completed last year, a 75% increase from 2022, with 45,400 more houses now under construction.    

Sources: FRED, JBREC, JCHS, RentCafe

Supply

Status: Critical

• Single-family builds and starts dropped by about 50% in the last decade. Construction in the 2010s suffered from a labor shortage, supply chain disruptions, and increasing land prices.

• Although construction in the 2020s has moderately rebounded, the country is carrying over a significant deficit from the prior decade.

• In 2024, both for-sale and for-rent inventory are critically undersupplied, with even conservative estimates placing the shortage at around 2 million.

💡: Catching up isn’t going to be easy. New home construction continues to be hampered by high loan rates, a shortage of buildable lots, onerous regulations, and a lack of skilled labor. With headwinds persisting, national housing starts and permits fell last month.  

Sources: FRED, John Burns Research and Consulting, NAHB, Yahoo! Finance

Demand

Status: Critical

• Since 1970, the total U.S. population has increased by over 130 million.

• Population growth slowed significantly during the pandemic but has since rebounded. It grew by about 3.8 million in 2023, the largest one-year increase in U.S. history, driven largely by immigration as well as a decrease in deaths.

• It’s projected to grow by a record-high 4 million this year.

💡: To keep up with demand and population growth, the U.S. needs to build 18.6 million new homes both for sale and for rent over the next 10 years. That’s 1.86 million units per year through 2033.

Sources: FRED, JBREC, Newsweek

Pricing

Status: Critical

• Driven primarily by low supply, home prices have skyrocketed. The median home sold in May 2024 hit a record $419,300. 

• Current mortgage rates are more than double their all-time low of 2.65% in 2021. The Fed held rates steady at its June meeting and now anticipates just one rate cut this year. Redfin’s Chief Economist Daryl Fairweather says buyers are unlikely to see big movement in the near term.

• Home prices are rising much faster than wages. The median home price is now nearly 6x the median household income. It’s the highest ratio of home price to income in the past 5 decades.

💡: While paychecks are bigger than 50 years ago, Americans’ purchasing power has hardly budged. With inflation still outpacing wage growth for many groups, the media reports a tale of 2 economies, with data showing a strong economy and public opinion experiencing a “vibecession.”

Sources: CNBC, CNN, Freddie Mac, FRED, NBC, NPR, U.S. News

Homeownership affordability

Status: Critical

• The cost difference between owning and renting is the highest it’s been for at least 5 decades, since the 1970s.

• Following news earlier this year that it was cheaper to rent than to buy a typical home in all 50 largest metros, Redfin released a new report this spring stating that it’s now more expensive than ever to buy a home in the U.S.

• CBS reports the average American home loan at today’s rates will cost anywhere from $2,162.46 to $3,482.12 per month, depending on the term of your mortgage and the down payment you make.

💡: “A perfect storm of inflation, high prices, soaring mortgage rates and low housing supply caused 2023 to go down as the least affordable year for housing in recent history,” said Redfin senior economist Elijah de la Campa. The last time America’s housing market was this unaffordable was in the 1980s, when steep interest rates peaked at over 16%.

Sources: Barron’s, CBS, FRED, Redfin, Seeking Alpha, Statista, Visual Capitalist

Learn how AMH is contributing solutions to the national housing undersupply challenge by building thousands of homes every year: