Current Housing Supply Shortage Differs From Any Prior Crisis, Says Shaun Donovan

The current housing supply shortage and affordability crunch differ fundamentally from any historical precedent, according to Enterprise Community Partners CEO and former HUD Secretary Shaun Donovan. CNBC and Fortune reported on the ongoing market dynamics, which combine severe underbuilding with soaring borrowing costs to create a prolonged squeeze for buyers and renters alike.

What factors created the current housing crisis?

Home prices and rents skyrocketed during the pandemic-fueled housing boom, followed by a sudden surge in mortgage rates from historic lows that discouraged homeowners from selling. According to Shaun Donovan, the country experienced an 18% year-over-year increase in rents and unprecedented home price growth. Harvard University's Joint Center for Housing Studies reported that as of 2022, nearly one in four homeowners were stretched worryingly thin and half of all renter households were cost-burdened by spending more than 30% of their income on housing.

Median existing home sales prices reached a record $419,300 in May 2024, according to the National Association of Realtors. Meanwhile, Zillow's monthly housing reports showed home values sitting 45% higher than pre-pandemic levels, with typical mortgage payments up 115%.

How severe is the housing supply shortage?

Shaun Donovan estimated the national housing shortage to be between 5 and 7 million homes, while other industry snippets place the deficit at nearly 7 million units. Donovan stated in an interview that the country is just coming through the worst housing affordability crisis ever seen.

"We’ve had 18% year-over-year increase in rents, home prices rising at levels we’ve never seen. So we are seeing some leveling off, but it’s at a level that is well beyond what folks could afford," Donovan said, noting that housing prices have served as a primary driver of inflation.

What are market experts predicting for home prices and mortgage rates?

Market projections for home prices have varied among major entities. Zillow expected home prices to fall 1.2% over a one-year horizon from May 2024, Moody’s expected a 0.4% increase, and Fannie Mae expected home prices to finish up 1.5%.

Andy Walden, vice president of enterprise research strategy at ICE Mortgage Technology, noted that while some markets might see price corrections, baseline forecasts expect a lateral, neutral market for a couple of years to help rebalance. However, borrowing costs remain elevated. CNBC reported that the 30-year fixed mortgage rate hit 7.56% on Wednesday, October 14, 2026, up 10 basis points from Tuesday, and pending home sales dropped 7.3% in September 2026. Fannie Mae also sharply raised its mortgage rate forecast for 2027 in October 2026.