An analysis by the Public Policy Institute of California (PPIC) found that the state added 677,000 housing units<\/a> over a six-year period in which California’s population grew by only 39,000 residents.<\/p>\n Despite the relative growth in the number of housing units available, vacancy rates showed the market remained tight, with PPIC finding that owner vacancy declined from 1.2% to 0.8% while the rental vacancy rate was 4.3% in 2024, well below the national rate of 5.9%.<\/p>\n “Even though the state is adding more housing units than people, it was in such a deep hole that the recent successes in homebuilding are not enough to truly move the needle,” said Joel Berner, senior economist at Realtor.com.<\/p>\n AVERAGE MONTHLY MORTGAGE PAYMENT HITS NEW HIGH, TOPPING $2K FOR FIRST TIME EVER<\/a><\/p>\n California’s population growth slowed, but a longstanding housing shortage has kept the market tight. (Mario Tama\/Getty Images)<\/p>\n The state’s longstanding shortage of housing<\/a> units will require more construction to get inventory levels closer to the market’s equilibrium, as the state will need 2.5 million additional homes, according to a 2022 estimate by the state’s housing agency.<\/p>\n PPIC’s analysis also noted a demographic trend that’s affecting California’s housing market, with average household sizes declining in recent years.<\/p>\n It found that California lost 82,000 households with children and gained 722,000 households without them from 2019 to 2024.\u00a0<\/p>\n “Fewer people living under the same roof means more roofs are required for the same number of people,” Berner said.<\/p>\n THESE 8 US HOUSING MARKETS FAVOR BUYERS<\/a><\/p>\n California has eased rules to boost construction of accessory dwelling units (ADUs), such as this one in Concord, California. (Smith Collection\/Gado\/Getty Images)<\/p>\n The aging of California’s population is a key factor in the trend, as PPIC found that about 16.5% of the state’s population is 65 or older today and projects that number will rise to 24.9% by 2050.<\/p>\n Homebuilding has picked up in the state of California in the last five years, including through promoting the construction of accessory dwelling units<\/a> (ADUs), which are secondary living units that are on the same lot as a primary home but are typically detached or otherwise self-contained.<\/p>\n “The state has made significant progress from a policy perspective on encouraging ADU construction in recent years, for which it should be commended,” Berner added. “The state has made efforts to lift local restrictions on ADUs, which is helping it to deliver more and more of them where they are needed the most.”<\/p>\n WHITE HOUSE LAYS OUT FIXES FOR HOUSING AFFORDABILITY PROBLEM<\/a><\/p>\n California’s shortage of housing has persisted despite an uptick in construction. (\u00a0Kevin Carter\/Getty Images)<\/p>\n Both PPIC and Berner suggested that while California is making progress, it hasn’t achieved a breakthrough in resolving its housing shortage as new homes are being snapped up quickly and vacancy rates remain low.<\/p>\n Berner noted that while 11.5% of the U.S. population lives in California, the state accounted for only 7.3% of newly permitted housing units<\/a> last year, adding that the “pace just isn’t fast enough.”<\/p>\n PPIC noted that household formation rates among young adults in California have trended up, suggesting that younger residents are forming households \u2013 though the state will need sufficient lower-cost housing at entry-level prices<\/a> for them to afford to take those next steps in California.<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/04\/california-subdivision-housing-01.jpg\")
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