The Housing Shortage in New York City

New York City is experiencing its most severe housing shortage in over 50 years, creating an affordability crisis that affects residents across all five boroughs. Experts estimate the city needs about 500,000 homes over the next decade, or roughly 50,000 units per year. But in 2024, only about 15,000 housing permits were issued – about 30% of what is likely needed.

The housing crisis represents one of the city's most significant policy challenges. With vacancy rates at historic lows, high construction and operational costs, and affordability issues for many residents, comprehensive solutions require sustained commitment and cross-sector collaboration. 

Addressing the housing shortage will require continued political support, effective implementation of new policies, and sustained investment in market-rate and affordable housing production. Recent reforms provide essential tools for increasing housing supply, but their impact will depend on effective execution at scale and continued adaptation to changing market conditions.

The following brief outlines the current status of the housing shortage in New York City and recent efforts to meet the challenge.

New York City has a historical shortage of housing.

 

• New York City’s rental market is historically tight, pushing up prices. The rental vacancy rate is 1.4%, the lowest since 1968. Since the 1960s, New York has been below the 5% vacancy threshold that economists consider “balanced.”

• Employment growth has outpaced the increase in housing supply. From 2010 to 2023, New York added nearly 900,000 new jobs but only 300,000 new homes.

• New York permits fewer new housing units annually than other cities. From 2013 to 2022, New York City permitted 29 housing units per 1,000 residents, compared to 80 for Houston, 73 for Dallas, 59 for Seattle, and 55 for Atlanta.

Wage increases are not keeping pace with rent.

• The housing scarcity pushed the median rent to $3,397 in 2025. This represents an increase of 5.6% over the past year and 18.1% over the last five years. In Manhattan, the median rent reached $4,500 earlier this year. 

• New York City saw the highest gap in growth between rent and wages in the country. Last year, rents rose seven times faster than wages – 8.6% compared to 1.2%. Since 2019, rents in New York City have risen 27.5% while wages have only increased by 11.2%.

• A large portion of New Yorkers’ income goes to rent. Nearly 30% of renters spend more than half their pre-tax income on housing. More than half of New Yorkers spend more than 30% of their income on rent.

High construction and operational costs discourage investments.

• Half of the city’s rental units are regulated. Around one million rent-stabilized units make up 41% of all rental units. These units are at the center of the political conversation around freezing rent and decisions by the Rent Guidelines Board that often upset both landlords and tenants. 

• While New York needs more housing, building in the city is more expensive than anywhere else. High labor, materials, financing costs, and complex site conditions elevate costs and elongate timelines, making planning and building new projects difficult.

• Operating a multifamily building in New York costs 50% more than the national average. Rental buildings report spending 60-65% of gross rental income on expenses, compared to 38% in other parts of the country. Landlords' most significant cost, property taxes, make up 30% of rental income in New York City compared to 13% nationally.

Recent efforts in the city seek to streamline permitting and new development. 

• City of Yes for Housing Opportunity is expected to support 80,000 new housing units over 15 years. The program, approved in December 2024, incentivizes density increases, expanding office-to-residential conversions, and reducing or eliminating parking mandates, particularly in transit-rich areas.

• City for All secured a historic $5 billion investment package. Approved last year, the funding will advance comprehensive housing solutions—including deeper affordability, preservation, tenant protections, NYCHA repairs, infrastructure upgrades, legal aid, and incentivizing homeownership.

• The Charter Revision Commission proposed four ballot questions for this November to streamline land-use processes. These include fast-tracking publicly financed affordable housing in under-built districts, creating a new Land Use Appeals Board, enabling expedited review for modest housing and infrastructure projects, and digitizing the City Map.

Solving New York City’s housing shortage will require a citywide commitment to building at scale, cutting red tape, and aligning community interests. The recent legislative and funding initiatives offer promising momentum. Their success hinges on effective execution, ongoing political will, and adaptability in the face of economic and demographic shifts. Leaders must build upon this foundation and scale solutions to deliver new housing faster. Without decisive action, the affordability crisis will deepen, undermining the city’s economic vitality, workforce stability, and quality of life for millions of New Yorkers.