Local government leaders rank housing as a top currentconcern, but Daniel McCue, lead author of the Harvard Joint Center for Housing Studies' "2026 State of the Nation's Housing" report, said housing activity in 2026 is "sluggish."

"Construction is down, home sales are flat, and cost burdens are rising," McCue said ahead of a panel discussion following the report's release on Wednesday.

Here are seven key takeaways from the report.

1. Economic conditions weaken housing demand

McCue noted that this year's report shows economic headwinds manifesting as insufficient demand. Consumer confidence, job growth, and householdgrowth have all declined sharply. As a result, new home construction has slowed, with single-family construction down 7%. Multifamily construction was stronger than expected but "failed to overcome the sharp decline in 2024," the report said. "Uncertainty and a slowing job market are also affecting residential mobility, another driver of housing demand, which is also declining," the report noted.

2. Vacancy rates rise

Rising inventory has also contributed to the slowdown in housing construction. After hitting historic lows in 2022 and 2023, national homeowner and renter vacancy rates have risen, reaching 1.1% and 7.3% respectively in the first quarter of 2026. But both rates remain below historical averages, indicating that "at least several hundred thousand" more homes are still needed to meet demand, the report said. Trends are inconsistent across the country, reflecting regional housing production levels, with the South seeing the largest rebound in vacancy rates and the Midwest the smallest.

3. Lowest-income groups hit hardest

In 2024, the number of cost-burdened renters reached a record 22.7 million, or 49%, of whom 12.1 million (26%) were severely cost-burdened. The share of cost-burdened homeowners also continued to rise, reaching 20.7 million in 2024, an increase of 4 million since 2019.

Cost burdens rose fastest among middle-income households. But the report said the 11 million lowest-income households face the "most severe and intractable housing shortage," competing for only 3.8 million rental units within their price range.

4. Homeownership rate declines

Despite slight price relief from increased inventory, high costs pushed the homeownership rate down for the second consecutive year, falling to 65.2% last year. The largest declines were among younger people, with only 37% of homeowners under 35, down from 39% in 2022. Since 2020, national home prices have more than doubled.

5. Low-rent units are disappearing

Rising vacancy rates have led to a decline in national rents for the first time since 2021. But after adjusting for inflation, the number of units renting for less than $1,000 per month fell by more than 30% between 2014 and 2024, a loss of 7 million units. With more Low-Income Housing Tax Credits set to expire over the next decade, this number is expected to decline further. The data is one of the "most striking findings" in the report, said Chris Herbert, managing director of JCHS, during the panel discussion. "This mainly means they are being lost to inflation and a tight market," he said. "While we may not need as much new supply... I don't want to overlook the fact that addressing affordable housing needs is not only through construction but also through preservation strategies."

6. Federal funding levels insufficient to meet ongoing demand

The report said only one in four extremely low-income households receives federal housing subsidies, and as of 2023, 13.8 million eligible households (including nearly 9 million with "most severe housing needs") remained unassisted. "Federal rental assistance remains severely underfunded," the report noted.

7. States push housing policy with unprecedented vigor

The report said states are participating actively in housing discussions for the first time. It highlighted Washington, Vermont, and Maine for passing comprehensive statewide reforms allowing small multifamily buildings on lots previously zoned exclusively for single-family homes, and noted that Arkansas and Iowa advanced mandates for accessory dwelling units on residential lots. Kentucky, Maine, Maryland, and Rhode Island also made progress in advancing manufactured housing.

"This is truly a new phenomenon," said Stockton Williams, executive director of the National Council of State Housing Agencies, during the panel discussion. "States are typically absent from statewide housing policy discussions," but now states across the country "are taking unprecedented action on housing," he said.