America Faces Shortfall of 7.2 Million Affordable Rental Homes

No state in the union is coming close to building enough affordable housing to shelter all of those who need it, according to a new report from the National Low Income Housing Coalition.

The NLIHC's annual report on the state of affordable housing found a shortage of 7.2 million affordable and available rental homes for very-low-income renters, those 11 million who make below 30% of the area median income. That translates to just 35 units per 100 people.

That leaves most of those renters cost-burdened in a way that prevents them from being able to save for a home. It's also a drag on the larger housing market, said Dan Emmanuel, research director for the NLIHC.

"The market alone, without subsidy, cannot produce adequate supply that is affordable to the lowest-income renters," Emmanuel told Realtor.com®.

And it comes when a shortage of housing at all other income levels is already impacting people in other low and median income brackets.

The Realtor.com housing supply gap report released this week shows the shortage of homes hit 4.03 million. The lagging pace of home construction meant an estimated 1.8 million Gen Z and millennial households were missing last year.

Trickle-down effects

Renters who make below 30% of the area median income, the lowest bracket of low-income people, fall into a few buckets. About a third are in the labor force in low-wage jobs, and another third are seniors. An additional 18% have a disability and about 6% are either students or caregivers.

In theory, supply-side solutions can help reduce pressure on these renters, because those in higher incomes can move into newer units, freeing up more affordable housing for those at lower incomes. And it would prevent price inflation from supply shortages.

And the numbers could be underreported, the NLIHC said, because the research is based on the U.S. Census Bureau's 2024 American Community Survey. That address-based data skips homeless, transient, or doubled-up households.

Affordable housing policies in focus

But the NLIHC says specific investment in affordable housing subsidies and other programs, like the Low Income Housing Tax Credit, are needed to turn the tide. The LIHTC got a boost in the One Big, Beautiful Bill, which increased the 9% credit allocations by 12%.

The Trump administration has pitched policies that aim to cut red tape and reduce costs to create more housing. In a conversation at the Milken Institute on Thursday, U.S. Department of Housing and Urban Development Secretary Scott Turner said the government must formulate more policy both on the supply and demand sides of housing.

"The federal government can do its job in facilitation and taking down regulations and rule-making, but the private sector is where the real results are," Turner said.

Emmanuel said these efforts are a positive sign, as are many of the zoning reform bills in the states and the bipartisan housing bill working through Congress this week. But lower-income households require other support. That includes things like housing vouchers and expanding the capabilities of the LIHTC.

"The tax credit program is important for expanding the supply or preserving affordable housing," Emmanuel said. "But by itself it doesn't directly address the cost burdens, which need a source of rental assistance."

The NLIHC, though, was one of the backers of a push by Senate Democrats to cut tax breaks and bolster antitrust enforcement of landlords. It said in its report the Trump administration's staff cuts in some HUD offices and in other funding hamstrung affordable housing efforts.