Harvard Report Shows Stakeholders Must Address Housing Affordability Crisis Together

High housing costs are affecting households across the board — from renters to first-time home buyers to current owners, according to the latest Harvard University Joint Center for Housing Studies’ (JCHS) The State of the Nation’s Housing 2024 report. The report highlights the significant jump in both rent and home prices — which are up 26% and 47%, respectively, since 2020 — and primarily affected by a lack of inventory.

Unsurprisingly, the number of households that are cost burdened (i.e., spending more than 30% of their income on housing and utilities) is also growing. Half of all renter households — 22.4 million in total — were cost burdened in 2022, up 2 million since 2019 and the highest number on record.

The number of cost-burdened home owners also grew by 3 million to 19.7 million between 2019 and 2022, with most of the increase among households with incomes under $30,000, as insurance rates and property taxes have risen. High interest rates are also having a negative impact, as fewer home owners are putting their homes on the market because they have locked in lower interest rates and would face a sharp increase in costs with a new mortgage at the current rates.

Housing demand continues to rise as additional households are formed and seek housing options, putting additional pressure on the market. Generation Z has added 8 million households in the past four years, along with a surge in immigration, which accounted for 3.3 million households in 2023.

Among these challenges, one of the bright spots is the efforts to boost housing supply — even amidst rising interest rates.

According to the report, multifamily completions rose by 22% to 449,900 in 2023, the highest annual level in more than three decades, and the number of units under construction in March 2024 remained near the record high. On the single-family side, new homes have constituted about a third of available single-family inventory since 2021 — a sharp increase from the past four decades, during which new construction made up just 14% of inventory on average.

“It points to the strength of interest in homeownership,” stated JCHS managing director Chris Herbert during a panel discussion following the report’s release, noting the efforts home builders are making to build smaller homes and provide a variety of options where possible.

During the panel, Herbert and others specifically addressed some of the challenges facing housing attainability, highlighting several key issues related to NAHB’s 10-point plan to solving the housing affordability crisis — most notably zoning reform, which is gaining momentum at both the local and state level.

“Addressing these challenges will not be easy,” Herbert noted in a press release. “But with concerted efforts by policymakers at all levels of government, together with the private and nonprofit sectors, we have the ability to increase the supply of quality, affordable homes in thriving communities across the U.S.” 

Learn more about NAHB’s solutions to the housing affordability crisis at nahb.org/plan.

*Note: All articles have been redistributed from NAHB.org/blog*

© 2024 National Association of Home Builders of the United States. All rights reserved.