America's Housing Supply Problem: The Closing of the Suburban Frontier?

Housing prices across much of America have hit historic highs, while less housing is being built. If the US housing stock had expanded at the same rate from 2000-2020 as it did from 1980-2000, there would be 15 million more housing units. This paper analyzes the decline of America's new housing supply, focusing on large Sunbelt markets such as Atlanta, Dallas, Miami, and Phoenix that were once building superstars. New housing growth rates have decreased and converged across these and many other metro areas, and prices have risen most where new supply has fallen the most. A model illustrates that structural estimation of long-term supply elasticity is difficult because variables that make places more attractive are likely to change neighborhood composition, which itself is likely to influence permitting. Our framework also suggests that as barriers to building become more important and heterogeneous across place, the positive connection between building and home prices and the negative connection between building and density will both attenuate. We document both of these trends throughout America's housing markets. In the Sunbelt, these changes manifest as substantially less building in lower-density census tracts with higher home prices. America's suburban frontier appears to be closing.