Most housing economists agree that the United States has a severe shortage of homes, with estimates ranging from Freddie Mac’s 3.7 million unit deficit to the National Association of Realtors’ 5.5 million. But a new commentary argues that this widely shared consensus is looking backward at demographic trends that are about to reverse.
The argument rests on population and household formation projections rather than current home prices or rents, which remain high and are often cited as proof of scarcity.
Shifting Population Forecasts
The Census Bureau’s baseline projection has the U.S. population peaking around 370 million in 2080, but that assumes continued high immigration. Under the bureau’s low-immigration scenario, population peaks much sooner, at roughly 346 million in 2043, before falling to 319 million by 2100.
The Congressional Budget Office’s latest forecast, using lower immigration and fertility assumptions, projects population growth reaching zero by 2056, with deaths outnumbering births starting in 2030.
Household Formation Slowing
Harvard’s Joint Center for Housing Studies projects the U.S. will add 8.6 million households between 2025 and 2035, then just 5.1 million between 2035 and 2045 — what would be the slowest decade of household growth in at least a century. Under Harvard’s low-immigration scenario, those numbers drop to 6.9 million and 3.2 million respectively, or about 320,000 new households a year by 2035–2045.
As the baby-boom generation ages, more existing homes are also expected to come onto the market through deaths and household consolidation. Harvard projects underlying demand for new construction falling to about 1.1 million units a year over the next decade and 800,000 during 2035–2045 — or just 610,000 annually under the low-immigration scenario.
Comparing to Current Construction
Census Bureau data show housing completions running at a seasonally adjusted annual rate of 1.192 million in September — already above Harvard’s baseline projection of underlying demand for the coming decade, and nearly double its low-immigration projection for the following decade. If that pace continued, the commentary argues, the cumulative excess over projected demand could theoretically close Freddie Mac’s entire estimated shortage within ten years.
The Zoning Debate
Despite these projections, many housing advocates continue to push for eliminating zoning restrictions that limit residential density, arguing such rules artificially constrain supply and drive up prices.
The commentary pushes back on that framing, noting that economic research shows households have measurable preferences for lower-density living, and that zoning provides buyers protection against uncertainty when purchasing an expensive, long-lived asset like a home. It argues that part of the price premium associated with restrictive zoning reflects value that buyers are knowingly paying for — not simply a market distortion.
It also frames zoning as one of the few areas where local homeowners, rather than real estate agents, builders, and mortgage lenders, have historically prevailed in shaping policy.
The piece concludes that making potentially irreversible changes to zoning laws in response to a shortage that demographic trends suggest may be fading could prove to be a costly miscalculation — one that leads not to too few homes, but too many.
