For years, the narrative around the U.S. housing market has been driven by one consistent theme: America is short on homes. Zillow has been one of the loudest voices shaping that narrative, publishing research that estimates the country is missing 4.7 million housing units. This number has been echoed by the U.S. Chamber of Commerce and cited across financial media.
But a fresh analysis from tax attorney and real estate investor Toby Mathis is complicating that story. Mathis, the founder of Anderson Business Advisors and a bestselling author on real estate investing, broke down the national housing deficit figure in a recent video and argues the conventional shortage narrative misses critical context, particularly for anyone trying to understand where the real opportunities and risks in the housing market are.
“We do not have a uniform housing shortage across the United States,” Mathis said. “We have a shortage of affordable housing in desirable locations.”
The distinction isn’t just academic. According to Mathis, how investors, homebuyers, and policymakers interpret the shortage fundamentally changes the advice that follows, and gets the big question wrong about whether the housing market is built to crash or built to grind.
What Zillow’s housing deficit data shows
Zillow’s research, which the company recently cited in a February update, calculates the national housing deficit at about 4.7 million homes. This is up 159,000 from the prior assessment. This analysis points to a structural gap, highlighting that while the total number of homes in the U.S. increased by 1.4 million in 2023, that growth wasn’t enough to meet demand from the 1.8 million new families formed each year.
The Zillow figure has become one of the most-cited statistics in housing policy conversations, and while it’s among the highest figures, it does not stand alone. Freddie Mac has estimated the deficit at 3.7 million units, while Goldman Sachs has placed it between 3 and 4 million. The National Association of Realtors has cited a figure of approximately 4 million, and the U.S. Chamber of Commerce has aligned with Zillow’s 4.7 million estimate.
Taken together, the consistency across major institutions has cemented the housing shortage narrative in both mainstream media and policy circles. The consensus has driven headlines about the need for aggressive construction incentives, zoning reform, and affordability policies. At the core, each emphasis is built on the premise that America simply doesn’t have enough homes.
While he concedes there is a housing shortage, Mathis argues the raw numbers tell a more complicated story than the headlines suggest.
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Why the housing shortage picture is more complicated
Mathis’s analysis starts with a simple observation that rarely appears in shortage headlines. He notes, as of 2026, the U.S. has roughly 148 million housing units and approximately 134 million households. On paper, that’s a surplus of about 14 million units, rather than a shortage.
The reason the raw numbers don’t reflect the widely accepted shortage, Mathis argues, is that several categories of housing units aren’t actually available to the households that need them.
Some units are vacant because they’re uninhabitable. Others are second homes, seasonal properties, or investments held off the market. Others sit in areas with no jobs or local demand. Mathis estimates that roughly 6 million homes in the national inventory are not safe or habitable without significant investment.
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Mathis also points to an often-overlooked reality, stating a healthy housing market actually requires a certain level of vacancy to function. Economists generally estimate that a balanced market needs 5 to 8% vacancy to accommodate normal life events like job changes, divorces, moves, and the ongoing wave of older Americans downsizing. Applied to 148 million units, Mathis notes that’s roughly 16 million homes that should be empty at any given time simply for the system to function.
When Mathis adjusts the 148 million total for vacancy and uninhabitable units, the effective housing supply drops closer to 126 to 132 million, which is right on the edge of the 134 million households figure.
“Do we have a housing shortage? Yes, but not in the way people think,” Mathis said.
Key takeaways on the U.S. housing shortage
- Zillow estimates a 4.7 million-home deficit: Zillow’s latest report put the national housing shortage at 4.7 million units, with other institutions like Freddie Mac, Goldman Sachs, and NAR landing in the 3 to 4 million range.
- Raw numbers show a surplus, not a shortage: The U.S. has roughly 148 million housing units and 134 million households in 2026. This 14 million-unit gap looks like excess supply on the surface.
- A functional housing market requires vacancy: Economists estimate that 5 to 8% of housing units must remain vacant at any given time to allow for normal life events like moves, upgrades, and downsizing, subtracting roughly 16 million units from effective supply.
- Millions of units are uninhabitable or off-market: Second homes, seasonal properties, investment holds, and severely damaged units further reduce usable supply, with an estimated 6 million homes unsafe or inhabitable without major investment.
- The shortage is a mismatch, not a raw deficit: The U.S. has plenty of homes in low-demand regions but severe shortages of affordable housing in high-growth markets like Texas, Arizona, Florida, Tennessee, and Nevada.
- The mortgage rate lock-in is making it worse: Homeowners who locked in mortgages at 2 to 4% rates are reluctant to sell into a 6 to 7% market, reducing the number of homes that actually come up for sale and shrinking effective supply further.
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