The U.S. housing market has grown and stabilized in the past few years as it’s recovered from the Great Recession. However, a low supply of units for sale and rising unaffordability remain major problems according to the Harvard Joint Center for Housing Studies’ 2018 State of the Nation’s Housing report, which was to be released today during an event at the National Press Club in Washington, D.C.

The center released its first State of the Nation’s Housing report in 1988. Since that time, more than 40 million housing units have been built in the U.S. and the country has added 27 million new households. Last year’s national homeownership rate of 63.9 percent was  close to the 64 percent rate of the late 1980s.

However, the number of American households facing high housing costs has risen by nearly 14 million  during  the past 30 years and the number with student loan debt has nearly doubled. At the same time, the gap between black and white homeownership has widened.

“By many metrics, the U.S. housing market in 2018 is on sound footing,” said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies. “But a number of challenges highlighted in the first State of the Nation’s Housing report 30 years ago persist today , and in many respects the situation has worsened for both the lowest-income Americans and those higher up the income ladder.”

Growing income inequality has helped drive the increase in cost-burdened households. According to the report, the real median income of households in the bottom 25 percent  increased only 3 percent between 1988 and 201 6, while the median income for adults aged 25 to 34 rose by just 5 percent. Meanwhile, the median home price grew 41 percent faster than inflation between 1990 and 2016, the median rent grew 20 percent faster, and the nation had 2.5 million fewer units renting for less than $800 a month.

The increases in prices and rents combined with fewer subsidies for low-income households mean that nearly a third of all households (38 .1 million) paid more than 30 percent of their incomes for housing in 2016, the widely accepted metric for affordability . These include 20.8 million renters (47 percent), and of these, 11 million pay more than half their income for housing. While these figures are down slightly from their peak during the recession, they are significantly higher than in previous decades.

“If incomes had kept pace with the economy’s growth over the past 30 years, they would have easily matched the rise in housing costs,” said Daniel McCue, a senior research associate at the Harvard Joint Center for Housing Studies and lead author of the report. “But that hasn’t happened.”

The  report also points to a low supply of new housing, which is hurting affordability. There were 1.2 million new housing starts in 2017, up slightly from 2016 . The entire increase last year came from single-family starts, which were up 8.6 percent. However, that was just 849,000 units in 2017, well below the 1.1 million-per-year historical average.

Multifamily starts, which had helped power the housing recovery in recent years, fell by 9.7 percent to 354,100 units.

Because of these factors, house prices rose 6.2 percent in 2017 and now top pre-recesssion peaks in most of the nation’s largest metros. While rents also increased by 3.7 percent, the report says rent increases are slowing and vacancies are increasing, particularly for new, high-end units.

According to the report, the easing of conditions in the rental market shows that U.S. households are returning to homebuying after a decade of growing rental demand.

The national homeownership rate rose for the first time in 13 years to 63.9 percent last year, up 0.5 percent from its low in 2016. Although the overall rate is now similar to the rate that prevailed in the late 1980s, the gap in the black and white homeownership rates is larger than it was 30 years ago. Homeownership rates among young adults are down sharply as well.

Overall, the new report shows that, if the nation is to make real progress in addressing its housing challenges , there is a clear need to expand assistance for those beyond the market’s reach.

“We need strategies to help the private sector produce more moderately -priced housing,” said Herbert. “Doing so will require new approaches for making effective use of public funding, reducing construction costs , and easing regulatory barriers.”

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