U.S. housing is still short ~4.03 million homes—why build-to-rent is growing (and what could slow it)

What the latest ‘supply gap’ data says

Realtor.com’s 2026 Housing Supply Gap analysis estimates the U.S. ended 2025 with a cumulative housing deficit of about **4.03 million homes**, up from 3.8 million the year before. The key dynamic is simple: household formation has continued to outrun new construction, even when the annual gap looks ‘small’ on paper. In 2025, the report cites roughly **1.41 million** households formed vs. **1.36 million** housing starts—about a **50,000-unit** shortfall that compounds a decade-plus of underbuilding. [realtor.com]

A second finding matters for both renters and future buyers: Realtor.com estimates **1.82 million** Gen Z and millennial households were ‘missing’ in 2025 (delayed independent living because supply and costs don’t pencil). That’s pent-up demand that can re-enter the market quickly if affordability improves—even modestly. [realtor.com]

Why build-to-rent is becoming a bigger slice of single-family supply

Against that backdrop, build-to-rent (BTR) is expanding as a way to add single-family-style housing without waiting for existing owners to sell. In an NPR report, one striking stat is that **about 7% of new single-family homes** hitting the market are now intended for rent rather than sale. The same story reports that **BTR completions in 2024 were more than 10 times** what they were a decade earlier. [npr.org]

This is not just a niche product for one demographic. The NPR reporting highlights both older renters who don’t want the upkeep of ownership and younger professionals who want space and privacy (often with pets) but are not ready—or not able—to buy. [npr.org]

From a market-mechanics standpoint, the appeal is that new rentals can relieve pressure in two directions:

• For renters: more single-family rental choices can reduce bidding wars for a limited stock of existing single-family rentals.
• For would-be buyers: if some households choose to rent a BTR home instead of competing for a starter home immediately, it can marginally ease demand pressure at the entry level.

That said, BTR doesn’t magically create ‘cheap’ housing. It’s still new construction, with new-construction costs. The affordability benefit comes primarily from **adding units**—and doing it at scale.

The cost side: materials, tariffs, and builder math

Even with demand, builders and developers still build only when costs and expected rents/prices line up. NAHB argues that building material costs have risen sharply in recent years and that tariffs function like a tax on imported inputs, which often gets passed through to end consumers as higher prices. [nahb.org]

NAHB also highlights the industry’s exposure to imports: it estimates **$204 billion** of goods were used in new residential construction in 2024, with **$14 billion** imported (about **7%**). When imported inputs get more expensive—or simply less predictable—projects can be delayed, resized, or canceled. [nahb.org]

Separately, Realtor.com’s housing policy coverage describes proposed legislation that would automatically exempt certain home construction materials from current and future tariffs and create an application process for exemptions—an example of how policymakers are trying to reduce input-cost friction on the supply side. [realtor.com]

What to watch next

A few practical indicators will tell us whether the supply-side story is improving or stalling:

• **Single-family starts**: Realtor.com notes single-family starts fell to roughly **940,000** in 2025 (lowest since 2019 in its discussion), which would slow progress on the ownership shortage if it persists. [realtor.com]
• **Where the shortage is most acute**: Realtor.com says the South has the biggest absolute deficit (**~1.62 million homes**), while the Northeast looks most constrained relative to its construction history. [realtor.com]
• **Timeline realism**: even in an optimistic scenario with a big step-up in building, Realtor.com suggests it could take roughly **seven years** to eliminate the current deficit. [realtor.com]

The takeaway is not that any one strategy—BTR, zoning reforms, tariff relief—solves affordability alone. It’s that the math of a multi-million-unit deficit requires sustained, multi-channel supply growth, and that input costs can either amplify or blunt those efforts.