Housing Shortage Growing by 50,000 Units a Year
Homebuyers and renters should expect housing policy to shift toward construction as Congress takes up affordability.
Updated on Nov. 5, 2026 in Residential
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Democrats regained control of Congress in the midterm election, and housing policy is expected to move toward the center of the agenda after playing a limited role in Trump's second term so far. Oxford Economics economist Bernard Yaros argues that construction, not demand-side measures, should be the main focus.
Why it matters
A housing shortage estimated at well above 3.5 million units, growing by about 50,000 units per year, keeps pressure on prices and rents for homeowners and renters alike. Yaros says demand-side drag from mortgage rates is a bigger issue than supply constraints, and down payment assistance can push prices higher when supply is limited.
Freddie Mac and the US Chamber of Commerce put the housing shortage well above 3.5 million units, while Realtor.com estimates a 4.03 million gap as of 2025. Realtor.com says the shortage is growing by about 50,000 units per year as construction continues to lag.
The players
Oxford Economics
A global forecasting and economic consulting firm whose analysts publish outlooks on interest rates and the housing market.
Bernard Yaros
An Oxford Economics economist who says construction should be the main housing policy focus.
Federal Reserve
The central bank whose interest-rate decisions shape mortgage rates and the cost of borrowing for homebuyers.
Realtor.com
A real estate listings platform that publishes housing supply estimates showing a growing national shortage.
The details
Realtor.com says construction continues to lag demand, so the shortage widens by roughly 50,000 units each year. Yaros argues that mortgage rates are suppressing buyer activity more than limited supply is, which shifts the policy question. Down payment assistance can increase demand, and when supply stays limited, that added demand tends to show up as higher prices.
Timeline
November 5, 2026: Article published on Congress, housing, and the Fed outlook.
October 2026: NAHB/Wells Fargo Housing Market Index fell again on weaker sales expectations.
December 2026: Oxford Economics has pencilled in a possible Fed rate hike.
March 2027: Oxford Economics has pencilled in a possible second Fed rate hike.
2027: A resolution of the Iran war would be needed to ease inflation.
The Home Front
The Realtor.com estimate of a 4.03 million unit gap as of 2025 gives the current shortage a documented baseline. Policy attention moving toward construction would mark a shift from the demand-side focus that has shaped recent discussion.
If you are planning a purchase, watch mortgage rate movements around the Fed's December and March meetings, since rate hikes would raise borrowing costs. Budget conservatively for home prices, because a shortage growing by about 50,000 units per year tends to keep prices elevated.
The takeaway
Housing affordability is expected to stay top of mind in Washington, and the supply shortage that is growing each year is the core reason prices stay firm. Track the Realtor.com and NAHB/Wells Fargo indicators as a practical gauge of where the market is heading.
What happens next
Oxford Economics expects the Fed to hold a hawkish tone at its coming meetings, with possible rate hikes pencilled in for December and March.
Further reading
Explore more in Residential real estate for the wider housing market picture.
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Should the federal government prioritize building more homes over helping people buy them?
