Which US Regions Have the Most Severe Housing Underbuilding?

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A national shortfall of 7.1 million homes continues to drive a US housing affordability crisis and is being exacerbated by a recent slowdown in residential construction activity.

According to the National Low Income Housing Coalition, no state has an adequate supply of affordable rental homes available to its lowest-income renters. The most severe shortfalls exist in States along the West Coast, as well as Colorado, Texas, and Florida.

Permit Activity Slows

The undersupply of housing is a national problem, but its impact on renters is amplified in areas where household growth has outpaced construction activity more severely.

Examining local variations in multifamily building activity brings the affordability crisis into greater detail. Although single-family rentals have become an increasingly important part of the rental home landscape, multifamily apartments still account for the overwhelming share of rentals.

Multifamily building permits slumped back to pre-pandemic levels during 2025 as high borrowing costs and regulatory constraints softened growth.

Moreover, zeroing in on US metros that had positive net domestic and international migration between 2020 and 2024, metros along the West Coast, Northeast, and Great Lakes areas have struggled the most to keep up with demand in 2025, as demonstrated by low per capita permit activity. Pockets along the Appalachian region and the Midwest are also experiencing slower construction activity than is needed.

Room For Growth

Digging deeper, so far in 2025, the median number of multifamily building permits in metros with positive net migration is 0.91 permits per 1000 people. Over half (54.5%) of these metros have issued fewer than one multifamily permit per 1,000 people over this period, with cities in the Great Lakes and Northeast regions experiencing the most extreme shortfalls.

Apartment construction in cities along the US Gulf Coast in Alabama, Louisiana, and Texas has also fallen behind recent demand trends, while some notable Carolina metros, such as Augusta and Winston-Salem, rank among the most severely underbuilt.

From ‘Shortage’ to ‘Underbuilding’

A post-pandemic surge in Multifamily completions has lifted apartment vacancies off their 2021 floor, reducing the short-term housing shortage, but, as explained in a recent NMHC analysis, long-term structural underbuilding in the housing market remains a more relevant concern.

While Multifamily completions are on pace to reach another record high in 2025, relocations increased again in 2024, sustaining the pressure on rental housing inventory. In the past year, approximately 12.3 million households moved — 12.1% above the 2024 level and the highest total since before the pandemic (2019).

Recent federal tax changes, several state-level regulatory reforms, and the Fed’s ongoing accommodative shift should create more favorable finance and building conditions for rental housing developers in the coming months. All else equal, a less costly development pipeline would allow operators to introduce more rental affordability while maintaining their margins.