image from SACOG

SACRAMENTO — The Sacramento region is building housing at rates not seen in nearly two decades, but affordability continues to worsen for many households, according to the newly released 2025 Regional Progress Report from the Sacramento Area Council of Governments.

The report found the region completed more than 12,500 new homes in 2024, representing the highest annual total since 2005. The report states, “the more than 12,500 housing units completed in the region last year (2024) represent a near two-decade high in new housing construction.” The level of construction also exceeded the near-term housing growth projections in the 2025 Blueprint plan, which guides long-term planning and development across the six-county region.

SACOG reported that the Sacramento region has outpaced every major California metro area in housing production when adjusted for population. According to the findings, “when adjusted for population, the SACOG region has led California in housing production not just this year, but for eight years in a row.” The region has also led production in 18 of the last 24 years tracked.

The construction surge includes significant shifts in housing type. Historically, most new housing in the region consisted of large-lot suburban single-family homes. Recent trends show development is diversifying. The report notes the Sacramento region achieved a record number of attached units last year, stating, “the roughly 4,000 attached housing units (such as apartments, townhomes, or condos) completed in the region in 2024 are the most of any tracked year.”

Small-lot single-family construction and accessory dwelling units also climbed. New accessory dwelling units reached their highest levels since tracking began in 2018. The report notes that ADU development is now 15 times higher than it was before statewide legal and regulatory changes encouraging their construction.

Much of the shift is tied to infill development, particularly within designated Green Zones identified through the region’s Green Means Go initiative. These areas are locations where cities have pre-planned for growth but faced barriers such as high costs, environmental remediation needs or infrastructure gaps. SACOG reported “the more than 3,300 units completed in Green Zones in 2024 represent the highest total (and highest share of total units) to date.”

Green Zones accounted for more than one-quarter of all new units built last year, and nearly 80 percent of that housing was attached or higher-density housing. The report characterizes those trends as evidence of local planning efforts yielding tangible results after years of zoning reform, environmental streamlining and infrastructure investment.

Despite the increased supply, the report warns the region is still falling significantly short of meeting long-term housing needs, particularly for lower-income households. It states, “despite the impressive recent uptick in housing production, the region has a long way to go in tackling a housing shortage decades in the making.”

Affordability remains a core challenge. While home prices in the Sacramento area remain lower than in coastal California regions, they are high compared to similar midsized regions across the country. The report states, “with home values around $600,000, and rents at $2,300 a month, the Sacramento region has some of the highest housing costs of its midsized peer regions group (second highest home prices and third highest rents of the peer group of 17 regions).”

Housing costs have risen faster than wages over the past decade. SACOG reports that the ratio of home price to income climbed sharply, noting, “in 2012 the typical home in the area was valued at about 3.75 times the median regional income. In 2022 this rose to more than 6.75 times.” While the ratio dropped slightly in 2023 to about six times income due to modest income growth and a temporary decrease in housing prices, the region remains far outside lending benchmarks traditionally associated with affordability.

Rents have followed similar patterns. The report finds rents rose nearly 30 percent in the last five years, although rent inflation slowed compared to other midsized peer regions across the U.S.

Affordability gaps remain most severe for renters and households of color. The report notes, “well over a third of households in the SACOG region are considered housing cost burdened, or those paying more than 30 percent of gross income to cover housing costs.” The share is significantly higher among renters and Black and Latino households.

According to the data, more than half of all renters are burdened by housing costs, nearly double the rate of homeowners. The report also found that “more than half of all Black households in the region are housing cost burdened.” These disparities have remained largely unchanged over more than a decade of tracking.

Progress has been made in subsidized and income-restricted housing production, particularly in the past three years. The report notes that in 2024, “more than 20 percent of new units in the region served the low and very low income categories, an all-time high in the series.” However, taken over a longer timeframe, only about 5 percent of new housing built since 2018 has been accessible to low-income households.

Homeownership trends show similar barriers. The report states disparities by race and ethnicity in homeownership rates “stand little changed from 2009,” reflecting long-term structural inequities and rising barriers to entry as prices climbed.

While the report highlights progress in planning and production, it also raises concerns over rising interest rates, development costs and uncertainty in private construction markets. The report points to economic volatility and warns that recent production gains could reverse without continued policy and financial intervention.

The report includes data and analysis spanning Sacramento, Yolo, Placer, El Dorado, Sutter and Yuba counties and 22 incorporated cities. SACOG will continue tracking data through its Regional Indicators Dashboard.

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Categories: Breaking News Housing Sacramento Region Tags: Accessory Dwelling Units Green Means Go Homeowners Housing Affordability regional development Renters SACOG Sacramento Housing Sacramento Region zoning reform