The Affordability Divide: Why Building More Homes Is the Only Fix That Works

America doesn't have a housing crisis so much as it has a housing math problem. The country is short roughly 4 million homes, and that gap is the single biggest reason buying a house has slipped out of reach for so many families. While this is a nationwide problem, the real story is happening at the state level — and it's a story with two very different endings depending on the state.

Realtor.com's 2026 State Report Cards, which grade every state on affordability and homebuilding activity, lay out the divide in stark terms: the states building the most homes are the ones keeping prices in reach. The states building the least are drowning. Indiana, Iowa, and South Carolina prove the model works. New York, our beloved Massachusetts, and Rhode Island prove what happens when it doesn't. Our politician’s financial literacy and educational acumen on supply side economic theory must be scrutinized. We need to be ever leery and aware of a politicians educational background in supply and demand. Demand side economics has never worked throughout history and making sure that we elect people that understand that supply creates affordability is the key to growing a state into a prosperous place to live.

The Affordability Leaders: What Indiana, Iowa, and South Carolina Are Doing Right

Indiana

Indiana climbed from fourth place to first in this year's rankings, earning the only top score built on consistent strength across the board rather than one standout number. A median-priced home there costs $295,810, which eats up about 28% of the state's median household income of $71,469 — comfortably under the 30% threshold economists use to define "affordable." Indiana isn't just cheap; it's building. The state issued permits at a rate that roughly matches its share of the national population, and single-family construction has nearly doubled over the past decade, from about 12,000 units a year to more than 20,000.

Indiana Builders Association CEO Rick Wajdaput it simply: the state has worked to "keep the regulatory cost of housing to a minimum" at both the state and local level. That's the whole formula — low barriers to building plus steady follow-through. Is it possible that less government overreach and more streamlining of the building process can win for all consumers in a state? Read on.

Iowa

Iowa leads the nation on raw affordability. The typical Iowa household spends just over a quarter of its income on a median-priced home — the lowest share of any state. Iowa's weak spot is pure permitting volume, which lags the leaders, but its existing housing stock is so reasonably priced that it still ranks near the very top.

That being said, although homebuilding has eased slightly in 2026, the overall trend is still moving upwards with 1,120 more Privately Owned Housing Units Authorized in 2025 than 2024, according to the US Census Bureau. Major regional centers are still attracting strong investment and commercial development as well. Waterloo, for instance, recently reached a record $304 million in construction permit activity, supported by growth in retail projects and new industrial park development.

South Carolina

Last year's top-ranked state, slipped to third but remains the country's clearest example of building at scale. Its permit-to-population ratio is nearly double what its population share would predict, and — notably — newly built homes there are actually 5.7% cheaper than existing ones. That's the opposite of what happens in most expensive states, where new construction carries a steep premium. South Carolina's builders are constructing the kind of starter and mid-tier housing that the market actually needs, not just luxury inventory.

The common thread across all three states, and really across the entire top tier, is geographic and regulatory, not financial. Every state that earned an A or B grade this year was in the Midwest or South. Senior economist Joel Berner pointed to "available land, lower regulatory barriers, and a building culture that prioritizes volume and accessibility" as the difference-makers. Is it possible that our geography and our mindset of limiting and regulating everything to death is causing higher housing prices and less affordability? What about affordability requirements in new deals and expensive green requirements? Could that be the deadly combination that drives the cost per square foot of construction in these states to a breaking point?

The Affordability Laggards: New York, Massachusetts, and Rhode Island

If the top of the list runs on abundant land and light regulation, the bottom runs on the reverse.

New York

NY finished dead last out of 50 states and DC, scoring just 8.5 out of 100 — a flat F. A median-priced home in New York runs $668,173, requiring a household to hand over 55.2% of its income to afford it, nearly double the standard affordability benchmark. Worse, the state is barely building: its permit-to-population ratio of 0.45 means New York is constructing housing at less than half the rate its population share would call for, and permitting activity actually fell 17% year-over-year. This could be due to many housing policies in the city including a rent stabilization policy that covers about 1 million apartments.

These types of policies make property owners and investors want to run the other way. To add insult to injury, the new homes that do get built carry a 73.9% price premium over existing inventory — so even the new supply is priced for the top of the market. With financial literacy on the decline in NYC and threats of a socialist take over by questionable characters – the state may need to brace for an additional huge negative impact. Socialism has never created housing supply- quite the contrary. Throughout history tens of millions of people have left socialist countries to live with less regulations. Perhaps NY thinks that if they deploy socialism to NYC that enough people will leave and prices will come down? Only time will tell – but it doesn’t seem smart to lower rents through having an exodus of people.

Policy

Recent policy moves, including New York City’s newly approved rent freeze, will likely make the problem worse by further discouraging housing investment, squeezing property operations, and sending the wrong signal to developers. At a time when New York desperately needs more housing production, policies that cap returns without addressing supply constraints risk deepening the very affordability crisis they claim to solve.

Think of it this way; if you own your house and you got a pay cut at work – would you be able to upkeep your own home? What would happen to your home eventually? Where would you start cutting corners? All of this is common sense; if landlords don’t have money to repair their properties- they slowly slide into decay. No one wants to live in old outdated worn-out properties. What eventually happens is people flee to other states or areas with lower housing costs and newer properties with better amenities.

Massachusetts

Our own state ranked 50th, one spot ahead of New York, and has now logged back-to-back F grades. The state's housing production simply isn't keeping pace with population and job growth. Greater Boston has added only around 71,000 housing units since 2020, well short of the 140,000–180,000 units the region needs by 2035 just to stabilize costs — a build rate of roughly two units per 1,000 residents a year. Rents in the Boston area now average around $3,414 a month, and vacancy sits at 1.67%, below the 2-4% range considered healthy. That's not a market with breathing room; it's a market where every new household is competing for a shrinking pool of options. How did MA get to where it this happened?

Policy

The proposal of rent control recently also stifled housing production, permit applications, and sent would-be in-state buyers, out of state. According to the Boston Globe article written by Jon Chesto, building permits were issued for 432 housing units in the first three months of 2026. During the first quarter of 2025, 549 permits were issued, and 642 in 2024. This shows a steady decline, and a direct correlation to difficult zoning, poor proposed housing policy, and other factors impeding new housing development.

Again, this is all common sense, no developer is going to risk their life savings to build properties where either the government can take them, or regulate profit. In addition, first time home buyers, including owner occupants of multi-family properties (many that are in need of rentovation) are overwhemled by building and permitting regulations, this is what kills the american dream.

Real estate is the number one way to create wealth without a college degree, what our state is doing is taking that away, little by little. America was founded on self-reliance and risk-reward ratios. The fastest way to slow down supply is get in the way of developers, investors, and home buyers, causing them to leave for other states. The state of MA is going to have to look at their policies and start reversing a lot of the regulations that have caused people to flee.

Rhode Island

RI rounds out the bottom tier at 49th, also carrying an F for the second straight year. As America's second-smallest state by land area, Rhode Island faces real physical constraints on where new housing can go — but constrained land makes restrictive zoning even more costly, since every barrier to building on the land that is available compounds the shortage.

All three states share the same root problem: demand has stayed high while supply has stayed flat, and zoning rules, lengthy permitting timelines, and environmental review requirements have made it slow and expensive to build anything new. Realtor.com's report notes plainly that states in this bottom tier face "high prices, constrained land, restrictive zoning and building costs that far outpace what middle-income buyers can afford." These barriers to entry are not that hard to spot; the question becomes – what are these three states going to do about it?

Delaware

The States Bucking the Trend

Not every story in the 2026 report cards is a coastal-versus-heartland repeat of last year. A handful of states show that the trajectory can change quickly when policy shifts toward building.

Delaware was the most improved state in the country, jumping 12 spots into seventh place. Its building activity outpaced its population share, and a median household income near $87,667 helped residents absorb still-elevated prices — proof that strong construction numbers can offset a high price tag.

Utah matched that 12-spot jump, vaulting from 29th to 17th on the strength of a permit-to-population ratio of 1.82 — nearly double what its population share would suggest. Utah remains an expensive state to buy in, but its commitment to building at volume is visibly moving the needle.

Colorado and Kansas also posted notable gains, driven by healthy permitting activity and, in Kansas's case, genuinely strong affordability numbers to match.

And then there's North Carolina, which along with South Carolina shows what it looks like when a state nails both halves of the equation. North Carolina's new homes are priced slightly below existing inventory — a negative construction premium — even though affordability remains a stretch, with a median home eating up nearly 40% of median income. The lesson from North Carolina and Delaware alike: building activity can improve a state's standing even before affordability fully catches up, because supply is the engine that eventually brings prices down. Supply side economics always wins at the end of the day. We just have to start teaching this concept into all school systems across America.

What Massachusetts Needs to Do

Massachusetts doesn't have a demand problem. It has a supply problem, and most of the conversation in Boston right now is aimed at the wrong lever.  Never focus on the problem – always focus on the solution.  The good news is that the solution is fairly easy to implement.

Thankfully, a recent rent control ballot initiative was shut down, but Massachusetts needs to remember that capping rents treats the symptom only that were primarily created by erroneous politicians. Rent control and other shams such as “affordability requirements” doesn't add a single new unit to a market that is already roughly 100,000 homes short of what it needs by 2035.  Regulations and upending the free market forces always creates less housing supply. If anything, any regulations risk scaring off more developers that Massachusetts needs most right now, pushing capital and construction crews toward states with friendlier rules — exactly the states currently topping the rankings.  This is not a hard concept to grasp.  We are scaring away our building talent.  What are we gaining by having our construction crews leave MA?

Follow What Works

The fix that actually works is the one Indiana, Iowa, South Carolina, and this year's most-improved states are already running: clear regulatory barriers out of the way and let developers build. That means:

• Zoning reform that allows denser, multi-unit development by right in more places, rather than requiring case-by-case variances for anything beyond a single-family lot. Get rid of affordability requirements – they actually create the opposite. Less properties are built and prices stay higher.
• Faster permitting, so projects that already meet code and environmental standards aren't held up for months or years by discretionary review.
• Incentives for builders, including tax treatment and streamlined approvals that reward the kind of mid-market construction South Carolina and North Carolina have shown can be delivered at prices below existing housing stock.
• Saying no to rent control, which the historical worldwide record proves does nothing for new housing and creates the opposite of what it promises: less investment, less maintenance, and ultimately less housing. At least on this point we have won for now. But we must be ever vigilant against the forces of socialism and their erroneous and toxic thinking

Massachusetts doesn't need to reinvent anything. It needs to look at what's already working a thousand miles away and get out of its own way. The states winning the affordability fight aren't winning because their residents earn more or want housing less — they're winning because they let people build it. Let freedom of building reign and people can have better housing and lower costs.