Jul 2, 2026
We’re currently in a housing shortage, but a white paper published in June by the Mortgage Bankers Association says we might be overcorrecting. It estimates that, by 2045, we could be building 3 million homes too many — leading to a seller’s market.
“While affordability challenges remain significant, MBA’s research highlights the importance of looking beyond today’s market conditions,” says MBA’s senior vice president of research and business development, Mike Fratantoni. “These findings can help industry participants and policymakers better prepare for future changes in housing.”
Advertisement
To be clear, housing costs have been rising faster than inflation, likely caused by a nationwide housing shortage. Brookings estimates there was a 4.9 million housing unit shortage in 2023, while the National Low Income Housing Coalition estimated there was a 7.2 million rental home shortage specifically for low-income residents.
Thanks for subscribing!
Read the best of Moneywise in 5 minutes or less.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
The white paper, though, says the U.S. will be facing a supply-and-demand mismatch over the next two decades. Here’s what that could mean for you.
House creation is lagging behind pandemic-driven housing demands
The white paper says millennials were largely the cause of post-financial crisis home demand, which was made worse by the COVID-19 pandemic, when more people were working from home and mortgage rates crashed down to historic lows.
This also caused home prices to rise, since housing demand outpaced housing supply. The National Association of Home Builders reported that house prices increased by almost 55% nationwide from the first quarter of 2020 to the third quarter of 2025.
But housing takes time to build. The white paper says pandemic-driven projects started to be delivered in 2023 to 2025 — right when mortgage rates started to climb back up and buyers weren’t as motivated to lock in a good rate.
The white paper also points to other demographic shifts that could lessen demand over the next few years. Fertility rates have been trending down in the U.S., it says — that, combined with a legislative-driven restriction on immigration, could cause housing demand to go down.
The paper relies on housing demand projections from the Joint Center for Housing Studies to inform its estimation for the number of new housing units needed by 2045, which it puts at a little over 19 million.
For context, the paper estimates housing supply will go up by a little over 18.5 million on the low end — slightly lower than demand — to a little over 26.5 million on the high end, significantly above demand. Its midpoint puts new housing supply at 22.8 million by 2045, around 3 million units over its projected demand.
“The new housing estimates come from our anticipation of units added by vacancy and second homes vs. net adds from excess supply from aging and the loss in existing inventory,” said MBA vice president of communications Adam DeSanctis in an email to Moneywise.
Advertisement
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
The supply-and-demand mismatch could be good news for buyers, but bad news for sellers
In a press release on the white paper, the MBA said it expected house prices to decrease if these projections were accurate.
“If residential construction remains elevated while household formation slows, housing supply growth could outpace demand growth in some markets, placing downward pressure on home prices,” it says.
This is good news for buyers and renters, who could finally see income increases outstrip housing price increases. Of course, it’s not as good news for people hoping to sell or rent their houses in the next two decades, who might not see the return on investment they expected when they bought.
It’s hard to know how housing price decreases could impact the economy at large. It could cause panic selling and deflate local and state tax revenue — but it will also likely help alleviate increasingly hefty cost of living increases for low-income Americans.
Home prices aren’t likely to fall the same way everywhere across the U.S. The white paper lists the Northeast and Midwest United States as still showing significant housing demand — while Southern and Western states have high housing vacancy rates. Housing prices might not fall as far or as quickly in states still experiencing demand.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
