U.S. home prices and rents are experiencing unprecedented growth this year. There are several reasons for this surge, but the key cause is a prolonged housing-supply shortage that hit a record in 2020 and continues to deepen. New residential construction is starting to catch up nationally but is still far from reducing the shortage and, until then, upward pressure on housing costs will likely persist. Considering that housing rents (rent of primary residence and owner’s equivalent rent) account for more than 30 percent of the consumer price index, the trend is also contributing to rising inflation.

To evaluate opportunities as well as risks stemming from this situation, it helps to understand not only the aggregate housing shortage, but also how it is distributed across market segments, property subtypes, intended tenure (for sale versus for rent), and geographic areas. Although the data available for such an analysis is far from perfect, the Housing Vacancy Survey (HVS) th