Persistent affordability challenges and rising economic uncertainty are squeezing housing conditions, with weakening labor markets and plummeting immigration dampening household growth, according to a new report from the Harvard Joint Center for Housing Studies. The State of the Nation’s Housing 2026 report also finds that construction activity has softened, cost burdens for both renters and homeowners continue to climb, and federal assistance is profoundly underfunded.
Drivers of housing demand are weakening
The new report shows that household growth—a key driver of housing demand—slowed for the third consecutive year in 2025, falling from an average of 2.0 million households in 2021 to just 1.1 million in 2025. The slowdown reflects reduced household formation among young adults amid weak labor markets, heavy student debt, and intensifying economic uncertainty.
“Many young adults simply cannot afford to form their own households and are instead doubling up or living with family,” said Daniel McCue, Senior Research Associate at the Joint Center for Housing Studies (JCHS). “For others, deep uncertainty about their financial futures and about the broader economy are causing them to delay major life decisions. This pullback is a clear sign of economic stress that reverberates through housing markets.”
The report documents a record-low residential mobility rate of 11.2% in 2024, driven primarily by declining moves among homeowners, who are often “locked in” by below-market mortgage rates. Interstate moves have also fallen, easing population gains in fast-growing states like Texas and Florida and stemming losses in states such as California and Illinois.
Housing demand is further threatened by severely restricted immigration and increased deportations. Net international migration fell by half in 2025, and is expected to drop another 75% in 2026, to roughly a third of its average level from 2001 to 2019.
Construction softens as vacancies rise, but low-cost housing remains scarce
New housing construction softened again in 2025. Single-family starts fell 7% as high homebuying costs stifled demand and unsold inventories grew, prompting builders to cut prices, buy down interest rates, and pivot toward smaller, more cost-efficient homes and lots. Multifamily construction, while stronger than expected, remained below recent peaks as markets struggled to absorb a large wave of new deliveries and the near-term pipeline narrowed.
The most serious and intractable shortfall is in housing affordable to households with low and moderate incomes. As of 2024, 11.0 million extremely low-income renter households were competing for just 3.8 million affordable and available units. New market-rate construction is largely out of reach for these households and often unaffordable even to median-income renters.
“The existing stock of low-rent housing is shrinking rapidly, and private markets are incapable of producing enough deeply affordable units,” said Alexander Hermann, Senior Research Associate at JCHS. “The number of units renting for under $1,000 a month in real terms fell by more than 7 million between 2014 and 2024, while higher-rent units surged. Without significant new subsidies and stronger protections for at-risk properties, we risk losing even more of the limited affordable stock that remains.”
Cost burdens are at record highs for renters and rising for homeowners
Despite recent declines in market rents in many metros, renter cost burdens hit a new peak at last count in 2024. The report finds that 22.7 million renter households (49%) spent more than 30% of their income on housing, including 12.1 million (26%) with severe burdens, meaning they pay more than half of their income for housing. The number of cost-burdened renters has grown by 2.3 million since 2019, with the worst burdens among lower-income households and renters of color.
Meanwhile, homeowners are facing ongoing monthly costs near record highs as non-mortgage costs balloon: property taxes rose 31% between 2019 and 2025, while average monthly insurance premiums jumped 72%, as extreme weather and climate change inflict greater damage to the nation’s housing supply and put tens of millions of homes at significant risk.
At the same time, sky-high home prices and elevated mortgage rates are keeping many renters from transitioning to homeownership. Home prices have increased 54% nationwide since 2020, and in 2025 the median existing single-family sales price was nearly five times the median household income. Existing-home sales remain stuck at a three-decade low of 4.1 million, and the national homeownership rate has fallen for two consecutive years.
Federal assistance is deeply inadequate, putting pressure on states and localities
Federal housing assistance remains profoundly inadequate relative to need, and while recent changes to the Low-Income Housing Tax Credit will help finance additional units over the next decade, funding for vouchers and public housing is not keeping pace. In response, states and localities are expanding and innovating their own tools—loosening zoning and land-use rules, issuing state housing tax credits, establishing housing trust funds, and piloting new social and green housing models.
“Across the country, we see governors, mayors, and local leaders stepping up with creative solutions to expand supply and support vulnerable households,” said Chris Herbert, JCHS Managing Director. “But these efforts are patchwork and often precariously funded. Only the federal government has the scale and staying power necessary to close the gap between what our housing system produces and what our lowest-income households can afford. Without a more robust national response, we risk deepening inequities and entrenching housing instability for millions.”
About the Harvard Joint Center for Housing Studies
The Harvard Joint Center for Housing Studies strives to improve equitable access to decent, affordable homes in thriving communities. It conducts rigorous research to advance policy and practice and brings together diverse stakeholders to spark new ideas for addressing housing challenges. Through teaching and fellowships, the center mentors and inspires the next generation of housing leaders.
