What is a Housing Shortage?

The United States has faced decades of increasing housing costs and declining construction. Many scholars and policymakers argue that increased housing supply is needed to combat inadequate availability. Some critics, however, argue that the nation faces no housing shortage except for a lack of units for extremely low-income renters, which could be addressed by leveraging existing housing stock and expanding the availability of rental vouchers. I argue instead for a continued emphasis on increasing supply as a mechanism to improve housing conditions. I show, first, that additional housing stock is associated with more units per net added resident in an area. Second, I demonstrate that increasing supply is associated with lower housing-cost growth, though other variables like household income growth are likely more important in explaining affordability. Finally, I contest the use of metropolitan geographies as the most appropriate level for examining housing affordability, given the nation's history of segregation and variation in access to opportunity.