Across North America, the dream of an affordable home is slipping further out of reach for millions, as two of the continent’s largest countries face parallel crises in housing supply and affordability. Recent reports from both Canada and the United States paint a stark picture: despite ambitious targets and policy debates, the number of homes being built continues to fall short of what’s needed, and the consequences ripple through economies, communities, and families.
In Canada, the Parliamentary Budget Office (PBO) released a report on August 26, 2025, revealing that the nation is on track to build 2.5 million new homes by 2035. While that number might sound impressive at first blush, it’s actually 690,000 homes short of what’s required to meet demand over the next decade. The PBO projects that 3.2 million net new housing units are needed by 2035 to close what it calls the “housing gap.” Achieving this would require an average of 290,000 new units completed annually from 2025 to 2035—an unprecedented pace, equivalent to surpassing the record high of 276,000 units completed in 2024 for eleven straight years. As the PBO report notes, “This pace of housing construction would be equivalent to outperforming the record high of 276,000 units completed in 2024 for 11 consecutive years.”
But even these daunting figures may understate the challenge. The Canada Mortgage and Housing Corporation (CMHC) estimates that the country actually needs 5.3 million new homes over the same period, which would require an annual construction rate of 478,000 new units—far more than the PBO’s projections. The gap between these estimates underscores the uncertainty and scale of the crisis. In 2024 alone, Canada added a historic high of 482,000 new households, a surge driven in large part by immigration. However, recent government policy changes aimed at reducing immigration are expected to sharply decrease household formation in 2025 and 2026, with numbers remaining below the historical average of 176,000 until 2030, according to the PBO. The report also clarifies that its projections do not account for recent commitments by Prime Minister Mark Carney’s Liberal government, which has pledged to double the rate of housing construction and build 500,000 new homes a year. “Our updated outlook for net housing completions and the housing stock reflects long-term economic and demographic trends and does not include recent policy commitments by the Government to double the rate of housing construction in Canada,” states the PBO report.
South of the border, the United States faces a housing shortage of its own—one that’s even larger in raw numbers. According to a recent report from real estate website Zillow, there are 4.7 million fewer housing units than families in the US. This shortfall has grown over the past two decades, as the pace of construction has slowed. The problem is especially acute in areas with plentiful economic opportunities, where housing is both scarce and increasingly unaffordable. As Vox reports, this shortage has not only fueled displacement and inflation, but also stymied economic growth and social mobility, making it arguably “the single biggest economic problem in America today.”
One movement that has gained traction in response is Yes in My Backyard (YIMBY), a coalition of advocacy groups, think tanks, and intellectuals pushing for looser land-use regulations. YIMBYs argue that America’s housing shortage is, to a large extent, mandated by law. Zoning rules currently prohibit the construction of apartment buildings on roughly 75 percent of America’s residential land, effectively requiring most single-family homes to be large and expensive. Even in city centers, parking mandates and other regulations make multifamily housing difficult or financially unviable to build. The movement has notched some victories, with reforms passed in states such as Minnesota, California, and Montana. The publication of the book Abundance by Ezra Klein and Derek Thompson has further propelled YIMBYism into the national spotlight.
Yet, as Vox points out, zoning isn’t the only obstacle. America’s housing sector never fully recovered from the 2008 subprime mortgage crisis and Great Recession. Housing starts plunged in 2007 and have remained depressed since, despite economic rebounds in the years that followed. The regulatory burden on builders has grown: the financial cost of complying with land-use rules increased by 29 percent from 2011 to 2016, and about 40.6 percent of the cost of developing a multifamily housing project is attributed to regulations. But there are other constraints, too.
Financing is a major hurdle. The dollar value of all residential construction loans fell by 55 percent between 2008 and mid-2024, making credit more expensive and less accessible for builders. The Federal Reserve’s interest rate hikes since 2022, aimed at curbing inflation, have further slowed construction. Labor is another bottleneck. The construction industry lost nearly a million jobs between 2007 and 2011, and many workers never returned. Recruiting younger workers has proven difficult, and immigration of foreign-born tradespeople has declined. As Robert Dietz, chief economist at the National Association of Homebuilders, told Vox, “If you solve the zoning issue, the labor issue becomes the binding constraint. I do sometimes get a little frustrated when I see a thinktanker say, ‘Okay, if we fix the zoning issue, it’s going to be off to the races.’ No. There’s no single simple, scalable solution—we have to work on all of these challenges.”
Material costs have soared as well. The Great Recession shuttered many North American sawmills, and when demand rebounded, the industry struggled to keep up. Tariffs on lumber and metals, imposed during the Trump administration, made materials even pricier. All these factors combine to make new housing projects riskier and more expensive, even when regulations are eased.
So what’s to be done? Experts cited by Vox suggest a multifaceted approach. On the financing front, government-backed loan programs and tax incentives like accelerated depreciation could channel more capital into housing. Local governments, following the example of Montgomery County, Maryland, might provide favorable financing to multifamily projects in exchange for a share of future rents, creating a self-sustaining cycle of investment. Expanding immigration opportunities for skilled construction workers and increasing funding for vocational training could help address labor shortages. Reducing tariffs on materials would lower costs, while streamlining building codes could boost productivity through modular construction.
But even these measures aren’t enough to ensure universal affordability. As Vox notes, “It will never be profitable to sell shelter to the indigent. So no housing agenda is complete without policies that increase the ability of poor and working Americans to make rent, whether through cash transfers, rental subsidies, or social housing.”
Despite the complexity, advocates maintain that land-use reform is a crucial first step. Removing unnecessary constraints on building doesn’t cost taxpayers and can increase municipal revenues, making it easier to fund public housing and subsidies. In the words of Vox, “Cities are currently going out of their way to make housing scarce and unaffordable.”
The housing crises in Canada and the United States may differ in their details, but the underlying issues—regulatory barriers, financing challenges, labor shortages, and rising material costs—are strikingly similar. As policymakers and advocates search for solutions, one thing is clear: solving the housing shortage will require bold, coordinated action on multiple fronts, not just tweaks at the margins.
