Homeowner vacancy rate falls to 0.8%, study finds

According to Freddie Mac, America’s housing affordability crisis can largely be explained by one statistic: homeowner vacancy.

In a recent report, Freddie Mac showed that the national homeowner vacancy rate—or the percentage of homes that are vacant and for sale—fell to 0.8% in the first quarter of 2024. That’s just shy of the record low set in 2023 and well below the 1.6% average between 1994 and 2003—a period the report uses for comparison.

A razor-tight vacancy rate in the housing market is also spilling over into rental properties. The report found that the rental vacancy rate was 6.6% during Q1, unchanged from the previous quarter but well below the 8.2% average during the historical comparison period.

“Vacancy rates remain on balance very low,” Freddie Mac said in its report. “To bring the vacancy rate, both rental and homeowner, back in line with historical averages, the U.S. would need to add an additional 1.5 million vacant for-sale and for-rent homes.”

Freddie Mac said the dramatic housing shortage is pushing prices higher, creating a vicious cycle in which more people are priced out of the market.

Meanwhile, the country’s housing stock increased by just 1.6 million units last year, well short of the levels needed to satisfy demand.

Although most experts agree that a lack of supply is fueling the affordability crisis, new research suggests that a shortage in income growth is becoming an even bigger issue.

Affordability challenges hit low-income households differently

More Americans are being priced out of the housing market because their incomes simply can’t keep up with prices.

New research from the University of Kansas and The New School pulled 20 years’ worth of census data to determine the relationship between income growth and housing affordability.

“Affordability challenges stem more from the collision of low incomes with high housing prices, rather than from any absolute shortage of homes,” wrote lead researcher Kirk McClure, a professor emeritus at the University of Kansas.

The study showed that low-income households earning less than 60% of the local middle-class income were priced out of the rental market in almost every major metro area.

The picture was more dire for the poorest families earning less than 30% of the middle-class income, as only two cities in the entire country had enough affordable homes for them.

Put differently, there’s enough housing stock to house the poorest Americans, but they simply can’t afford to fill those units.

Organizations like the National Low-Income Housing Coalition and Urban Institute still refer to this trend as a “shortage,” but a shortage of affordable homes rather than an absolute lack of supply.

According to both organizations, the U.S. needs between 6.8 million and 7.3 million units to house the poorest families.