Despite housing shortage, America has 5.6 million vacant homes—what gives?

We’ve all heard that sky-high home prices in the U.S. are due in part to a major housing shortage.

But a new study from LendingTree found there are actually millions of vacant properties out there—5.6 million, to be exact.

LendingTree ranked the nation’s 50 largest metros by their share of unoccupied homes and revealed that, on average, 7.37% of homes in these metros are currently unoccupied.

So have we all just been sold a bill of goods about this “housing shortage”?

Well, not exactly.

“Just because there are millions of homes sitting vacant across the nation’s 50 largest metros, that doesn’t mean that the U.S. has an overabundance of housing,” says LendingTree senior economist Jacob Channel.

But Channel does concede in his analysis that “with home prices as high as they are, it may seem strange that so many homes in the nation’s largest metros are sitting empty.”

Top three reasons units are vacant

Millions of vacant properties in the U.S. “doesn’t mean millions of abandoned and dilapidated homes are lining metro streets,” notes Channel.

He says vacant homes can be—and usually are—unoccupied for many reasons beyond being uninhabitable.

The top reason that units are unoccupied is because they are currently offered for rent.

“Rental vacancy has climbed in recent years as rental inventory has managed to recover significantly in many markets,” says Realtor.com® senior economic research analyst Hannah Jones.

“This means that more rentals sit empty, waiting to be rented.”

The second reason for vacancy is that properties are used for seasonal, recreational, or occasional purposes.

This includes vacant units used on weekends or for other occasions; seasonal units such as beach cottages or hunting cabins; and interval ownership units such as timeshares.

“A house can be considered vacant even if it’s only empty for a relatively short time, like if it’s a vacation home not being used,” Channel says.

The third reason units are unoccupied is for personal/family reasons.

This includes units where the owner doesn’t want to rent it out or sell it; is still deciding what to do; or is keeping it for family usage.

What this means for the housing supply

Sadly, more vacant properties don’t necessarily result in a higher housing supply.

“Given the reasons why homes tend to sit vacant—and that vacancies tend to only be temporary—there isn’t much reason to conclude that the nation’s housing supply is anything but insufficient in the face of homebuyer and renter demand,” says Channel.

Right now, homeowner vacancy rates are at 0.9%, while rental vacancy rates are at 6.6%.

“These rates are both near recent historic lows as housing supply fails to meet demand at the national level,” says Jones.

What this means for housing prices

So could housing prices fall due to these vacancies?

It’s not likely.

“More nuanced factors are in play that help dictate prices—like location, the kind of mortgage rates offered to borrowers, square footage, the reasons why homes are unoccupied, and how long homes sit empty,” notes Channel in his analysis.

While rental vacancy has crept higher over the past couple of years, homeowner vacancy has ticked up just 0.2 percentage points from the recent historical low.

For-sale inventory remains more than 20% below pre-pandemic levels, according to Jones—which means fewer for-sale homes sit empty.

“The for-sale market remains undersupplied, which has kept home prices elevated despite waning buyer demand,” says Jones.

Metros with the highest vacancy rates

In the top five metros with the highest vacancy rates, vacancy rates are all in the double digits.

Jones says in popular vacation spots such as New Orleans (No. 1) and Miami (No. 2), “demand for short-term rentals or vacation rentals is very seasonal, which can boost vacancy in the offseason.”

Here are the top five, according to LendingTree.

1. New Orleans, LA

Total housing units: 466,902
Vacant housing units: 67,704
Vacancy rate: 14.50%
Most common reason for vacancy: For rent
Share of vacant housing units empty for most common vacancy reason: 23.49%
Median home value: $263,500
Median gross rent: $1,159

2. Miami, FL

Total housing units: 2,698,630
Vacant housing units: 348,710
Vacancy rate: 12.92%
Most common reason for vacancy: Housing unit is for seasonal, recreational, or occasional use.
Share of vacant housing units empty for most common vacancy reason: 50.44%
Median home value: $474,000
Median gross rent: $1,914

3. Tampa, FL

Total housing units: 1,540,717
Vacant housing units: 181,929
Vacancy rate: 11.81%
Most common reason for vacancy: Housing unit is for seasonal, recreational, or occasional use.
Share of vacant housing units empty for most common vacancy reason: 45.18%
Median home value: $372,100
Median gross rent: $1,729

4. Birmingham, AL

Total housing units: 531,634
Vacant housing units: 59,867
Vacancy rate: 11.26%
Most common reason for vacancy: Personal/family reasons
Share of vacant housing units empty for most common vacancy reason: 14.99%
Median home value: $247,900
Median gross rent: $1,153

5. Memphis, TN

Total housing units: 583,684
Vacant housing units: 60,389
Vacancy rate: 10.35%
Most common reason for vacancy: For rent
Share of vacant housing units empty for most common vacancy reason: 34.04%
Median home value: $265,200
Median gross rent: $1,200

Metros with the lowest vacancy rates

Only five of the metros in the top 50 have vacancy rates below 5.0%—and in all of them, the most common reason for vacancy is that the housing unit is for rent.

Take a look at these five metros with the lowest vacancy rates.

1. Portland, OR

Total housing units: 1,077,557
Vacant housing units: 48,906
Vacancy rate: 4.54%
Most common reason for vacancy: Housing unit is for rent.
Share of vacant housing units empty for most common vacancy reason: 42.38%
Median home value: $560,900
Median gross rent: $1,670

2. Minneapolis, MN

Total housing units: 1,574,923
Vacant housing units: 73,470
Vacancy rate: 4.66%
Most common reason for vacancy: Housing unit is for rent.
Share of vacant housing units empty for most common vacancy reason: 33.91%
Median home value: $369,500
Median gross rent: $1,427

3. Washington, DC

Total housing units: 2,532,369
Vacant housing units: 122,794
Vacancy rate: 4.85%
Most common reason for vacancy: Housing unit is for rent.
Share of vacant housing units empty for most common vacancy reason: 32.79%
Median home value: $574,000
Median gross rent: $1,945

4. Salt Lake City, UT

Total housing units: 484,627
Vacant housing units: 23,650
Vacancy rate: 4.88%
Most common reason for vacancy: Housing unit is for rent.
Share of vacant housing units empty for most common vacancy reason: 35.92%
Median home value: $547,500

Median gross rent: $1,639

5. Austin, TX

Total housing units: 1,090,174
Vacant housing units: 54,100
Vacancy rate: 4.96%
Most common reason for vacancy: Housing unit is for rent.
Share of vacant housing units empty for most common vacancy reason: 39.95%
Median home value: $487,200
Median gross rent: $1,752