U.S. vacancy rates hit their lowest readings in decades in 2021 for both owner and rental units, reflecting the “unprecedented housing shortage,” according to NAHB analysis of the 2021 American Community Survey. Homeowner and rental vacancy rates are one of several “key statistics” used to judge the health and direction of the housing market; low rates are typically interpreted as a sign of a tight housing market, with “abnormally low” rates signaling a greater housing shortage, according to the NAHB. According to the ACS, owner vacancy rates dropped below 0.9% and rental vacancy rates were 5.2%, both representing the lowest levels recorded since the survey started generating vacancy data in 2005.
Comparing current abnormally low vacancy rates with long-run typical rates across metro markets of the U.S., NAHB now estimates that 1.5 million units are required to close the gap and bring the current vacancy rates back to the long-run equilibrium levels. NAHB’s forecast indicates that this will take place between 2025 and 2030.
In case of homeowner properties, natural vacancy rates are typically smaller, simply reflecting slower housing turnover with owners moving in and out less frequently compared to renters. The gap between the “natural”, or long-run average, and current vacancy rate allows estimating the number of rental and for sale units needed to bring the vacancy rates back to the long-run equilibrium. Not surprisingly, large metro markets show the largest shortage of rental and for sale vacant units simply due to the sheer size of these housing markets. In these areas, even a small percentage drop below the long run average vacancy rates results in a shortage of thousands of vacant units.
The biggest shortages of vacant units for sale were registered by large metropolitan areas, including Atlanta-Sandy Springs-Roswell, Georgia; Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin; New York-Newark-Jersey City, New York-New Jersey-Pennsylvania; Phoenix-Mesa-Scottsdale, Arizona; and Miami-Fort Lauderdale-West Palm Beach, Florida.
