The U.S. housing market is being squeezed from all sides—slowing household growth, rising costs, and limited supply of affordable units—leaving renters and homeowners increasingly strained, according to the latest annual report from Harvard’s Joint Center for Housing Studies.
“The State of the Nation’s Housing 2026” report finds household growth, a key driver of housing demand, in a slump for a third consecutive year in 2025, falling to 1.1 million households from an average of 2 million households in 2021.
“Many young adults simply cannot afford to form their own households and are instead doubling up or living with family,” said senior research associate Daniel McCue. “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.”
Residential mobility fell to a record low in 2024 at 11.2%, driven primarily by declining moves by homeowners, who are locked into below-market mortgage rates. Interstate moves also have decreased since the pandemic outmigration, with population gains easing in Florida and Texas and stemming losses in California and Illinois.
According to the report, restricted immigration and increased deportations also are hampering housing demand. Between 2024 and 2025, net international migration fell by more than half to 1.3 million and contributed to a drop in overall population growth from 3.2 million to 1.8 million. The Census Bureau forecasts the immigration number dropping even further to just 321,000 next year, impacting household growth, especially in the rental market.
New housing construction softened last year; although higher than expected, multifamily construction remained below the pandemic peaks. However, the biggest shortfall was for housing affordable to households with low and moderate incomes.
In 2024, 11 million households competed for just 3.8 million affordable and available rental units—approximately 35 units per 100 extremely low-income households.
“The existing stock of low-rent housing is shrinking rapidly, and private markets are incapable of producing enough deeply affordable units,” said senior research associate Alexander Hermann. “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 strong protections for at-risk properties, we risk losing even more of the limited affordable stock that remains.”
Cost burdens also are at record highs for renters. Despite rents declining nationally for the first time since early 2021, they remain high relative to pre-pandemic levels. The report noted that by the first quarter of 2026, asking rents for professionally managed apartments increased 29% since 2020, outpacing non-housing inflation.
According to the report, the number of cost-burdened renters hit a new high in 2024 for the fourth consecutive year. Nearly half of renter households, 22.7 million, spent over 30% of their income on housing costs, including 12.1 million, or 26%, with severe burdens, paying over 50% of their income on housing.
With higher housing costs, households have less to spend on other basic needs. In addition, the social safety net has shrunk and the cost of necessities has increased from inflation and tariffs. Since 2020, the prices of groceries and medical care rose 31% and 16%, respectively.
The report also focuses on the nation’s housing challenges, noting “a concerted effort is needed from all levels of government, as well as the private and nonprofit sectors, to make meaningful improvements in affordability, housing stability, hazard mitigation, and retrofits for an aging stock.”
While changes enacted to the low-income housing tax credit through the One Big Beautiful Bill last year could produce as many as 1.2 million additional units by 2035, funding for vouchers and public housing isn’t keeping pace.
“Across the country, we see governors, mayors, and local leaders stepping up with creative solutions to expand supply and support vulnerable households,” said managing director Chris Herbert. “But these efforts are patchwork and often precariously funded. Only the federal government has the scale and staying power 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.”