Housing Affordability Shifted: Income Growth, Not Shortage, Driving Price Increases (SF Fed Study)

A Federal Reserve Bank of San Francisco analysis published February 6, 2026, challenges the premise that housing affordability is driven by supply constraints. The study found housing supply growth outpaced population growth in major markets, including San Francisco, and prices tend to rise with incomes. Researchers attribute escalating home and rent costs more to income inequality than to a housing shortage. "House price growth may reflect growth in housing demand driven by average income increases, with affordability concerns tied to divergent income growth at the top versus the middle," the authors wrote. Policies focusing on easing zoning and construction restrictions may miss the mark if the core issue is labor market and income distribution dynamics, suggesting reforms should target those factors to address affordability effectively.