Which U.S. states have the worst housing inventory problem?
According to a report from Freddie Mac, Oregon has the fewest available homes for sale among the 50 states.
Oregon is followed by California, Minnesota, Florida, Colorado and Texas as having the largest housing supply deficit.
Currently, a total of 29 states have abnormally low inventory, resulting from years of under-building, according to the report. Perhaps not surprisingly, these states have some of the strongest economies and thus are attracting people from other states.
“We are in the midst of a demographic tailwind, and we expect home purchase demand will remain strong well into the next decade as the peak cohorts of Millennials turn 30 years of age in 2020 and beyond,” says Sam Khater, chief economist for Freddie Mac, in a statement. “Simply put, new housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year.”
“More than half of all states have a housing shortage, and the shortage is no longer concentrated in coastal markets but is spreading to the middle of the country in more affordable states like Texas and Minnesota,” Khater adds.
West Virginia, Alabama and North Dakota are among the states that have a housing surplus – but these states are currently seeing an exodus of residents to states with stronger economies.
The migration to booming states is exacerbating the supply problem and, in turn, driving up home prices in the major metros.
While there are many reasons for the constrained supply, zoning regulations are the most binding location-specific reason for the housing supply shortage, Freddie Mac says.
States like California, Washington, and others have undertaken policy action to address this issue.