Total housing units grew by 1.51 million YoY (new construction minus demolition). Vacant for-sale & for-rent units jumped by 7.1%, to 4.93 million, highest since 2013.
By Wolf Richter for WOLF STREET.
The total US housing stock grew by 358,000 housing units in Q3 and by 1.512 million for the past four quarters, to 149.8 million housing units, according to the Census Bureau today. This is the net increase of new construction minus demolitions. Abandoned, dilapidated, or uninhabitable housing units are excluded from this count.
These are single-family homes, townhomes, duplexes, ADUs, etc., and units in multifamily buildings, such as condos and apartments.
This net increase of 358,000 housing units in Q3 provides housing for an additional 895,000 people, given the average household size in the US of about 2.5 people.
On an annual basis, the net increase of 1.512 million housing units provides housing for an additional 3.78 million people.
But population growth has slowed to a crawl, amid the crackdown on illegal immigration and tightening up of legal immigration. For the 12-month period through July 2026, the population increased by only 757,000 people, according to separate estimates by the Census Bureau earlier this year. The result is growth in vacant housing units.
The ballooning vacant housing stock.
The number of vacant housing units in Q3 grew by 169,000 quarter over quarter, and by 591,000 year-over-year, to 15.81 million vacant housing units.
Of these 15.81 million vacant housing units, 12.34 million were “year-round vacant,” or 8.2% of the total housing stock.
“Year-round vacant” does not mean that they were vacant for an entire year; it means they are intended for occupancy at any time of the year, as opposed to “seasonal vacant” housing units which are intended for seasonal occupancy (3.47 million units).
The 12.84 million year-round vacant housing units.
The number of year-round vacant housing units grew by 123,000 in the quarter (+1.0%) and by 463,000 year-over-year (+3.9%), to 12.34 million units.
The Census Bureau classifies year-round vacant housing units as:
- Vacant for rent
- Vacant for sale
- Rented or sold but new tenants/owners not moved in
- Held off the market:
- For occasional use
- Temporarily occupied by persons with usual residence elsewhere
- Vacant for other reasons
Vacant, on the market for sale or for rent jumped by 184,000 units in the quarter (+3.9%) and by 327,000 units year-over-year (+7.1%), to 4.93 million vacant units for sale or for rent, the highest since 2013 when the count was coming down from the Housing Bust.
Over the past five years, vacant-year-round units for rent and for sale surged by 1.48 million units.
Amid the current difficulties in selling a home (because prices are too high, and sellers loathe to cut them), homeowners have been shifting for-sale units to the for-rent market.
If they succeed in renting out the unit, the owners become what the industry calls “accidental landlords,” and their units shift from the vacant housing stock to the occupied housing stock.
If they don’t succeed, those units remain in the vacant housing stock, whether for rent or for sale.
If they pull the unit off the market, it enters the category “held off the market,” that we’ll see in a moment.
Vacant on the market for rent spiked by 139,000 units in the quarter (+3.7%) and by 319,000 units year-over-year (+9.0%), to 3.87 million, the most since 2011.
This includes the surge of the “accidental landlords” that tried to sell their home, but couldn’t find a buyer because the price was too high, and so now they’re trying to find a tenant but haven’t found one yet because the rent is too high.
Over the past five years, year-round vacant for-rent units rose by 1.14 million homes.
Vacant on the market for sale jumped by 45,000 in the quarter (+4.4%) and by 8,000 year-over-year (+0.8%) to 1.06 million units.
Over the five-year period, vacant for-sale units surged by 341,000 (+8.5%).
Note: This does not include occupied homes that are for sale. Those units are in the “occupied housing units” category, not in the “vacant” category. These are vacant homes for sale.
And remember: A portion of what used to be vacant for-sale housing units, and used to be in this category, are now vacant for-rent units in the “vacant for-rent” category above.
Vacant but rented or sold and not yet occupied units declined in the quarter by 104,000 units and year-over-year by 92,000 units, to 901,000 housing units.
Shadow inventory, vacant and held off the market: Of those 12.84 million year-round vacant housing units, 6.51 million were “held off the market” for a variety of reasons.
A portion of the held-off-the-market units constitutes the vacant shadow-inventory that will show up on the for-sale or for-rent market at some point.
Vacant units are “held off the market” fall into three categories:
- Held for occasional use
- Temporarily occupied by persons with usual residence elsewhere
- “Vacant for other reasons” (such as settlement of an estate, held off the market for personal reasons of the owner).
The count of year-round vacant “held off the market” units has shrunk over the past five years as the number of housing units that were vacant for-sale and vacant for-rent surged over the same period. So those held-off-the-market units came on the market, and the shadow inventory became the actual inventory.
But the number of held-off-the-market units increased by 43,000 in Q3 and by 227,000 year-over-year. So the shadow inventory increased a little:
In related matters:
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At today’s home price levels, the opportunity cost of holding a vacant investment home is very high. Real costs add up. RE tax, utilities, insurance, maintenance, plus probable loss of home value and rents the next several years at most locations.
Isn’t it easier and less risky to just sell the home and collect 6% on bonds?