NAHB Redefines the Quality of Existing Housing Stock

Although most Americans are likely to view housing quality as important, few would describe it as a serious problem, especially compared to other troubles housing markets are currently confronting. This view of housing conditions in the U.S. is shaped largely by the Department of Housing and Urban Development’s (HUD’s) method for measuring the quality of homes, which classifies only about 1.5 percent as severely inadequate.

At a conference hosted by HUD in 2011, NAHB introduced an alternative way to identify inadequate units. Using the same data source as HUD, NAHB defined inadequate housing in a way that not only helps explain why prices and rents are sometimes lower than expected, but also classifies a much larger share of existing homes as physically inadequate. This suggests that some Americans—particularly renters—are trading adequacy for affordability, and implies that the need for programs to support the construction of new housing, or renovate older units, is greater than many policymakers realize.

NAHB’s work on “Housing Value, Costs, and Measures of Physical Adequacy” was published in March of 2012, in HUD’s research journal Cityscape. The findings reported by NAHB in Cityscape include the following:

• Over 10 million homes in the U.S. are physically inadequate, about double the number usually reported as having even moderate problems. 
• Much of the inadequate housing stock consists of single-family and older structures. 
• Few owners and renters of inadequate units also have problems with housing affordability as conventionally defined, and therefore are a net addition to the count of Americans with housing problems. 
• A large share—over 19 percent—of vacant single-family homes are physically inadequate, and so are not ready for full-time occupancy without substantial renovation and repair. 

Click here to read the article that describes NAHB's findings and explains how and why NAHB developed the new definition of inadequate housing. Details of a more technical nature can be found in the Cityscape article.