Local government leaders resoundingly list housing as their number one concern of the day, but activity around housing in 2026 is “subdued,” according to Daniel McCue, lead author of the Harvard Joint Center for Housing Studies’ 2026 State of the Nation’s Housing report.
“Construction is down, home sales are flat and cost burdens are up,” McCue said ahead of a panel discussion following the report’s release Wednesday.
Here are seven takeaways from the report.
1. Economic conditions are weakening housing demand
Economic headwinds are showing up in this year’s report as a lack of demand, McCue said. Consumer confidence, job growth and household growth have all tumbled. As a result, new housing construction has softened, with single-family construction dipping 7%. Multifamily home construction, while stronger than anticipated, “failed to overcome the sharp decline in 2024,” according to the report. “Uncertainty and slowing job markets also affect residential mobility, another driver of housing demand that is also falling,” the report states.
2. Vacancy rates are on the rise
Rising inventory has also contributed to slower housing construction. After hitting historic lows in 2022 and 2023, national homeowner and renter vacancy rates are on the rise, reaching 1.1% for homeowners and 7.3% for renters in the first quarter of 2026. Both rates remain below historic averages, however, and indicate “at least several hundred thousand” units are still needed to meet demand, according to the report. The trends are also inconsistent across the country and reflect regional housing production levels, with the South seeing the largest vacancy rate rebound and the Midwest scoring the smallest.
3. Lowest incomes continue to be the most impacted
In 2024, the number of cost-burdened renters reached a record high of 22.7 million, or 49%, with 12.1 million, or 26%, severely cost burdened. The share of cost-burdened homeowners also continued to rise, reaching 20.7 million in 2024 — an increase of 4 million since 2019.
Cost burdens are rising the fastest among middle-income households. But the 11 million households with the lowest income levels are facing “the most serious and intractable housing shortage” as they compete for just 3.8 million rental units within their price range, according to the report.
4. Homeownership rates are slipping
Though increased inventory delivered slight price-growth relief, high costs pushed homeownership rates into their second consecutive year of decline, to 65.2%, last year. The largest decline was among younger adults, with just 37% of homeowners under the age of 35 compared with 39% in 2022. Since 2020, nationwide home prices have more than doubled.
5. Low-rent housing units are going extinct
Higher vacancy rates have caused rents nationwide to drop for the first time since 2021. But the number of monthly rental units below $1,000, adjusted for inflation, plunged more than 30% between 2014 and 2024 — a loss of 7 million units. That number is expected to fall even further as more Low-Income Housing Tax Credits expire in the coming decade. The data was among the report’s most “shocking findings,” said Chris Herbert, JCHS managing director, during the panel discussion. “Mostly what that means is that they've been lost to inflation in a tight market,” he said. “As we get to a place where we probably may not need as much new supply … I don't want to lose sight of the fact that addressing our affordable housing needs is not just through construction but through a preservation strategy as well.”
6. Federal funding levels are not adequate to address ongoing needs
Only one in four very-low income households receive a federal housing subsidy, according to the report, leaving 13.8 million eligible households — including nearly 9 million with “worst case housing needs” — unassisted as of 2023. “Federal rental assistance remains profoundly underfunded,” the report states.
7. States are advancing housing policies like never before
For the first time, states are becoming actively involved in the housing discussion, according to the report. The report highlights Washington, Vermont and Maine for passing sweeping statewide reforms to allow small multifamily buildings on properties previously zoned for single-family homes and calls out Arkansas and Iowa for moving forward mandates to permit accessory dwelling units on residential lots. Kentucky, Maine, Maryland and Rhode Island have also made strides in advancing manufactured homes.
“This really is new,” Stockton Williams, executive director of the National Council of State Housing Agencies, said during the panel discussion. “States generally have been MIA on state housing policy discussions,” but states across the country today “are taking unprecedented action on housing,” he said.
