Low Birth Rate Could Shift U.S. Housing Market From Shortage to Surplus

For the past decade, limited housing supply has been one of the defining characteristics of the U.S. residential real estate market.

Residential homes in a suburban neighborhood as economists assess the long-term impact of demographic changes on housing demand.

With fewer homes available, competition intensified even as prices climbed to record highs, Prashant Gopal reported.

Demand was fueled by record-low mortgage rates during the COVID-19 pandemic, triggering bidding wars and worsening affordability. Recent estimates of the national housing shortage have ranged from 1.5 million to 7.3 million homes.

However, a new white paper from the Mortgage Bankers Association (MBA) suggests the market could be entering a new phase in which a shortage of buyers—not homes—becomes the primary challenge.

Beginning in 2030, deaths in the United States are projected to outnumber births.

Without sufficient immigration—which has been reduced under the Trump administration's immigration policies—the U.S. population could begin to decline, according to projections by the Congressional Budget Office (CBO).

"The next decade is likely to be quite different," said Mike Fratantoni, the MBA's chief economist and co-author of the report. "We're moving from a time of rapid household formation to one where there's a slowdown."

Fratantoni noted that the outlook remains uncertain because it depends on several factors, including future immigration policy and labor market conditions that could support stronger household formation.