Homelessness is a large and growing problem in the United States. Nationally, the total number of homeless individuals at the end of 2024 was 770,000, a more-than-18-percent increase from the start of that year. Homelessness among families with children rose 29 percent, the greatest increase of any demographic, owing to difficulty finding housing they could afford. A key driver of this change is that housing costs have risen significantly faster than incomes, pushing low-income individuals and families toward homelessness.

Ending homelessness using current methods would be costly. According to one estimate in 2021, it would cost $1.3 trillion to cover the shortfall in housing units needed under the housing choice voucher program of the US Department of Housing and Urban Development (HUD), which is commonly seen by advocates as the federal government’s primary way of addressing homelessness. The rise in homelessness, despite years of federal, state, and local governments’ dedicating more money to address the problem, highlights the need for other approaches to solving this crisis.

Building more housing to combat unaffordable housing costs is the best approach, because it keeps people from becoming homeless in the first place. Housing data show that the United States has not built enough homes to keep up with population growth since the housing crash of 2008, creating an estimated deficit of 1.5 million to 6.5 million homes. A big reason for this lack of building is decades of government-imposed land-use and environmental restrictions that make new housing more expensive or block housing from being built in the first place.

Simply put, homelessness is a symptom of a larger problem: unaffordable housing costs created by a lack of housing. This problem can be solved by reducing regulations on homebuilding. Many people point to mental illness and drug abuse as the main causes of homelessness, because these conditions are often found among the homeless. These factors certainly play a role at the individual level, but evidence suggests that housing affordability is the key factor in explaining variations in homelessness across cities.

This research in brief first describes trends in homelessness and in government funding of homelessness programs. Next, it examines the evidence on the individual and structural factors that underlie homelessness, explaining why ending the housing shortage is the most effective way to end homelessness. Finally, it shows how states can solve the homeless crisis in a more cost-effective way by respecting property rights–by reducing housing regulations and allowing more homes to be built.

Read the full report here.