Bridging the Affordable Supply Gap

One of the biggest factors affecting housing affordability is the availability of affordable homes. Limitations of inventory have led to large spikes in average home price. But by better understanding where demand truly lies, we can begin creating more suitable supply.

Inventory of affordable homes is low, and prices continue to rise in many markets. To make housing more affordable, we need to bridge the supply gap.

Since 2011, the number of existing single-family homes for sale has declined more than 30%. At the same time, we’ve seen an unprecedented increase in home prices. This is why when we examine how to increase affordability, we focus on how to expand the supply of homes. By supplying more homes that are affordable for first-time and lower-income buyers, the housing industry can increase homeownership rates for everyone.

In 2018, 70% of younger homebuyers said they planned to purchase a home in the next 12 months

To explore how America can create the right kind of supply for today’s market, we first examined the attitudes and preferences of prospective homebuyers. Putting aside the yet unknown long-term effects of COVID-19, a healthy housing market needs to grow by providing homeownership opportunities for all generations, from Gen Z to seniors.

We focused our recent research on two younger generations—Millennials and Gen Z—that have reached or are approaching prime first-time homebuying age. According to our research, 88% of survey respondents in these generations are both excited and confident they will one day be homeowners. And according to MetroStudy, in 2018, 70% of Millennial survey participants—which represents around 52.5 million of the 75 million total population—planned to purchase a home in the next 12 months.

So, what can we as an industry do to help solve this issue?

Fannie Mae, in collaboration with industry partners and housing professionals, is working to not only bridge the gap between demand and supply but create and test new solutions to increase access to financing for qualified homebuyers at every life stage.

For low-income and rural homebuyers, we are exploring and implementing various strategic initiatives as part of our Duty to Serve plan. Through this program, we support shared-equity models, such as those that promote affordable access to homeownership through community land trusts, which allow homebuyers to purchase homes at below-market prices, and programs that use resale restrictions to ensure future buyers are not priced out of the market.

We are also increasing loan purchases in high-needs rural regions, including purchases from small financial institutions, which provides more liquidity and can lower mortgage costs in underserved areas. And through our MH Advantage® mortgage, we are making conventional mortgage financing available for certain manufactured homes with features similar to those of site-built homes.

Together, let’s make housing more affordable for all. Share this article and help spread the word.


Fannie Mae, "Future Homebuyers," Single-Family Strategy & Insights unpublished research (November 2019). | Fannie Mae, "Builders," Single-Family Strategy & Insights unpublished research (December 2019). | Hayward, "Affordable Housing Crisis Demands Renewed Focus on Housing Supply," Fannie Mae Perspectives (March 2019). | MetroStudy, “Activating the Millennial New-Home Buyer,” (January 2016). | Taylor, “A Growing Problem in Real Estate: Too Many Too Big Houses,” The Wall Street Journal (March 21, 2019). | Evangelou, "Wage Versus Home Price Growth," National Association of Realtors (March 2019). | Hickey, "2019 State of the Nation's Housing Report: Lack of Affordable Housing," Habitat For Humanity (2019).