These Cities Are Narrowing Their Home Supply-Demand Gap

The housing supply-demand gap appears to be closing across a majority of the U.S. According to the National Association of Realtors’ Quarterly Housing Shortage Tracker, nearly 90% of major metros have made progress in narrowing the gap by issuing more single-family building permits.

The index analyzes how many building permits have been issued in comparison with the number of jobs created in a particular location in order to gauge the number of homes needed to suit the city’s population. Typically, one permit is issued for every new job created. A growing index indicates that more jobs are being created than homes in a specific area, while a lower index shows more homes being built.

Through this analysis, the tracker shows that Boulder, Colo. has made the most progress in closing its housing supply-demand gap. The city’s index decreased by more than 89% in Q-2 2025. Several California metros also topped the list, including Santa Maria-Santa Barbara, Vallejo-Fairfield, Los Angeles-Long Beach-Anaheim, and Oxnard-Thousand Oaks-Ventura.

By the end of the second quarter of 2025, about 45% of the market areas had a housing shortage index of two or lower. This is a noteworthy boost in permit-issuing activity compared to the same time last year when only approximately 20% of the areas were near a balanced index. However, some markets were still slow to adjust.

Among the areas with the greatest housing shortages: Urban Honolulu, HI, continued to have the highest housing deficit in the nation, with one permit issued for every 14 new jobs. Nonetheless, this marked the second consecutive quarter of improvements in Honolulu's index, which saw an 8.6% decline this month and roughly a 35% decline at the end of the first quarter.