In the midst of a stubbornly stagnant U.S. housing market, Zillow Group Inc.’s chief executive, Jeremy Wacksman, has pinpointed a fundamental culprit behind the nation’s affordability woes: a chronic shortage of new home construction that has failed to keep pace with demand for over a decade. Speaking in a recent interview highlighted by the Daily Mail, Wacksman described the crisis as rooted in underbuilding, exacerbated by high mortgage rates and reluctant sellers locked into low-interest loans from the pandemic era. This diagnosis comes as home sales hit a 30-year low, with many Americans priced out despite steady job growth and wage increases.

Wacksman, who took the helm at Zillow in 2024, emphasized that the U.S. has been short millions of homes since the Great Recession, when construction plummeted and never fully recovered. “We’re not building enough homes,” he told reporters, noting that local regulations, labor shortages, and rising material costs have stifled new supply. This scarcity has driven median home prices to record highs, hovering around $400,000 nationally, while inventory remains 40% below pre-pandemic levels, according to Zillow’s own data.

Inventory Crunch and Seller Reluctance Deepen the Divide

The reluctance of current homeowners to sell is another layer of the problem, as Wacksman explained. With most holding mortgages below 5%—some as low as 3%—listing a property means facing today’s rates above 7%, effectively freezing the market. A report from The New York Times echoes this, quoting Wacksman on how Zillow thrives amid the freeze by attracting “gawkers” and dreamers browsing listings even when transactions stall. Yet, for buyers, this means fierce competition for scant available homes, pushing affordability further out of reach for first-time purchasers and lower-income families.

Recent data from Zillow’s market reports, as detailed in a GuruFocus analysis dated July 21, 2025, shows a slight uptick in inventory, with more sellers resorting to price cuts to move properties. This shift signals potential relief, but Wacksman warns it’s insufficient to resolve the underlying supply deficit. He advocates for policy changes, such as easing zoning laws and incentivizing builders, to spur construction and alleviate the crunch.

Forecasts Point to Modest Declines Amid Persistent Challenges

Looking ahead, Zillow’s projections for 2025-2026 paint a picture of tempered expectations. The company now anticipates a 1% drop in national home prices by mid-2026, a revision from earlier optimistic forecasts, as outlined in a Fast Company map-based report. This comes amid warnings from Wacksman in a TheStreet piece that high rates will continue suppressing activity, with sales unlikely to rebound significantly until borrowing costs ease.

Industry insiders note that while some markets, like those in the Sun Belt, may see price growth due to migration and job influxes—per a Norada Real Estate analysis identifying 10 booming areas—national trends lean toward stagnation. A five-year outlook from U.S. News predicts flatter price increases and gradual sales recovery, but only if construction ramps up.

Broader Economic Ripples and Sentiment on Social Platforms

The housing slowdown’s effects ripple into the broader economy, with Zillow’s stock dipping 2.74% to a 2025 low amid market jitters, as reported by AInvest. Posts on X (formerly Twitter) reflect growing pessimism, with users like real estate analysts forecasting steeper price drops due to rising inventory and demographic shifts, such as aging baby boomers downsizing. One widely viewed post from May 2025 highlighted Zillow’s revised forecast cutting expected price gains in half, signaling negative real returns when adjusted for inflation.

Wacksman remains optimistic about Zillow’s role, leveraging its platform to connect buyers and sellers digitally. However, he stresses that without systemic fixes to boost supply, the crisis will persist, leaving millions in rental limbo or overextended on mortgages. As the Federal Reserve eyes potential rate cuts, industry watchers are monitoring whether this could thaw the market, but Wacksman’s insights underscore that building more homes is the true long-term solution.

Policy Imperatives and Future Pathways

For policymakers, Wacksman’s call to action aligns with broader debates on housing reform. Initiatives like tax credits for builders or streamlined permitting could address the underbuilding he identifies, potentially adding hundreds of thousands of units annually. Yet, challenges remain, including environmental regulations and community opposition to development, which have historically slowed progress.

In conversations with insiders, Wacksman has pushed for innovation in modular housing and tech-driven efficiencies to cut costs. As Zillow expands its services— from virtual tours to AI-powered valuations—the company positions itself as a stabilizer in turbulent times. Still, the CEO’s stark assessment serves as a wake-up call: America’s housing woes stem from years of inaction, and 2025 may test whether the market can pivot toward recovery or deepen its freeze.