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America has a housing shortage. According to Realtor.com, the gap between single-family home construction and household formation grew to 6.5 million homes from 2012 to 2022.

And despite the Federal Reserve's substantial interest rate hikes aimed at curbing inflation, housing affordability continues to elude many areas across the country, with rent prices surging in tandem.

Yet according to a new analysis by LendingTree, millions of homes stay vacant in America.

Using the latest U.S. Census Bureau American Community Survey data, LendingTree found that there are 5.5 million vacant housing units in the 50 largest metros in the U.S. This results in an average vacancy rate of 7.22%.

"In a simplified version of the housing market, vacancy rates should have a strong inverse relationship to home and rent prices," wrote Jacob Channel, senior economist at LendingTree.

But reality can be different from theory, as home prices remain high in many parts of the country. Channel explained that there are "more nuanced factors" in play, such as location, mortgage rates, unit size and reasons homes are unoccupied.

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The study revealed that New Orleans, Miami and Tampa, Florida, have the highest vacancy rates in the country, standing at 13.88%, 12.65% and 12.15%, respectively. In contrast, the lowest vacancy rates are found in Minneapolis; Austin, Texas; and Washington, D.C., with rates of 4.51%, 4.57%, and 4.98%, respectively.

Minneapolis, Austin and D.C. are the only three cities with vacancy rates below 5%.

Why Homes Are Vacant

Given the housing shortage in the U.S., you might wonder why these units remain unoccupied.

LendingTree's analysis showed that the most prevalent reason (26.61%) for vacant housing units in the nation's 50 largest metropolitan areas is that they are available for rent.

Meanwhile, 17.04% of housing units remain vacant because they are used only part-time.

Additionally, 7.98% of homes are unoccupied because of ongoing repair or renovation work.

LendingTree also pointed out that in cases where an area exhibits both high vacancy rates and high home prices, it may indicate the presence of distinctive features, such as being a sought-after vacation destination or a prime target for investors.

Housing Affordability In America

With rising interest rates, homebuyers find themselves contending with larger mortgage payments.

According to The State of the Nation's Housing 2023 report from Harvard University's Joint Center for Housing Studies, the annual income needed to afford payments on a median-priced home in the U.S. is now $117,100, up nearly $20,000 from last year.

And that means millions of households are now priced out of the market.

"The number of renter households able to afford these higher payments shrunk by 32%, from 7.5 million to 5.1 million, a loss of 2.4 million potential homebuyers," the Harvard researchers said.

To navigate an expensive housing market, LendingTree suggests shopping around for the best possible rate, considering different loan options and getting preapproved for your mortgage before you start house hunting.

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