The numbers highlight the seriousness of the housing deficit, which is a major factor fueling the current booming housing market. The shortage is particularly acute for entry-level homes, making it more expensive for first-time homebuyers to enter the market, said Sam Khater, chief economist at Freddie Mac.

“We should have had almost four million more homes if we had met the demand in recent years,” Khater said. “That’s what you get when you underbuild for 10 years.”

Freddie Mac reached his shortage figure by assessing the amount of single-family home construction needed to meet the demand for household formation, second home purchases, and damaged or aging American home replacements, and comparing that with the pace of construction.

The shortage of supply is a barrier to economic growth in the United States, driving up house prices and making it difficult for first-time buyers to enter the market and build wealth, said Freddie Mac.

Residential construction activity has been subdued since the 2007-2009 recession, when many builders went bankrupt. Although builders have increased their activity in the past year, they are hampered by shortages of labor, materials and developed land. Many builders pace their home sales to make sure they don’t sell more homes than they can build.

Single-family housing starts rose last year to 991,000 units, the highest rate since 2007. But housing starts fell in January and February on a seasonally adjusted basis as construction costs rose, according to data from the Department of Commerce.

Home builders are expected to build between 1.1 million and 1.2 million single-family homes per year to meet long-term demand, but the start-up rate is expected to be even higher to reduce the existing deficit, said Rob Dietz , chief economist at the National Association of Home Builders.

Freddie Mac estimated in 2018 that the United States was short of 2.5 million units to meet long-term demand. The new estimate is at the end of 2020.

Part of the current shortage stems from the moratorium on foreclosures linked to the pandemic, and investors buying single-family homes to rent them have also played a small role, Khater said. But most of the shortage is due to home builders not keeping up with long-term demand growth, he said.

Typically, demand for housing declines and supply increases during a recession, he said. But the effect of the Covid-19 pandemic is unusual in that it spurred demand for housing as high-income households who could work from home wanted more space and were willing to live further away from their offices. . At the same time, the pandemic has caused bottlenecks in the supply chain and allowed delays that have slowed the construction of new homes.

Home prices are rising rapidly as buyers compete for a limited number of homes. In February, there was a two-month supply of homes for sale, near a record low, according to the National Association of Realtors. Median home prices in the month jumped nearly 16% from the previous year to $ 313,000, NAR said.

The makeup of newly built homes has also changed, with large, expensive homes accounting for a larger share of residential construction activity. Builders built 65,000 homes under 1,400 square feet in 2020, up from over 400,000 such homes per year in the late 1970s, said Freddie Mac.

Write to Nicole Friedman at [email protected]