Housing Underbuilding Intensifies in Northeast and Great Lakes Metros

National Shortfall Persists

The United States remains short by approximately 7.1 million homes, with no state currently offering sufficient affordable rental options for its lowest-income residents. According to the National Low Income Housing Coalition, the most severe shortages are concentrated in West Coast states, as well as Colorado, Texas, and Florida.

Permitting Declines Amid Rising Demand

Multifamily construction permitting has slowed considerably in 2025, particularly in high-growth metros across the Northeast, Great Lakes, and Gulf Coast. Developers face mounting challenges, including elevated borrowing costs and tighter regulatory environments. While single-family rentals have gained traction, multifamily units still constitute the backbone of the rental housing market.

In cities that experienced strong population growth between 2020 and 2024, permitting activity has not kept pace. Lagging construction is especially evident in the West Coast, Northeast, Great Lakes, Midwest, and Appalachian regions.

Underbuilding Widespread Across Metros

Among growing metropolitan areas, the median number of multifamily permits issued in 2025 stands at just 0.91 per 1,000 residents. Over 54% of these metros have issued fewer than one permit per 1,000 people, with the Northeast and Great Lakes regions emerging as the most underbuilt.

The Gulf Coast—including parts of Alabama, Louisiana, and Texas—also shows significant gaps between demand and permitting. In the South, cities such as Augusta and Winston-Salem rank among the lowest in permitting relative to population growth.

Completions Increase, But Supply Remains Constrained

A post-pandemic surge in multifamily completions has helped alleviate some vacancy pressures. In fact, completions in 2025 are on track to reach record levels. However, demand continues to outstrip supply, driven in part by heightened relocation activity—12.3 million households moved this year, marking the highest total since 2019.

Looking ahead, potential shifts in federal tax policy, interest rates, and regulatory frameworks may offer developers opportunities to reduce costs. These changes could pave the way for increased construction of affordable rental housing nationwide.