There aren't enough homes in the U.S. That's one big reason house prices have barely fallen since the Fed's rate hikes sent mortgage costs soaring, Emily writes.

Why it matters: Except for the very wealthy who can afford to buy whatever they want, the housing shortage touches almost every aspect of Americans' lives and livelihoods and hits the overall economy, too.

• The lack of affordable housing means some are shut out from that first rung on the ladder to building wealth, while for others the more immediate threat of homelessness is never too far off.

By the numbers: Estimates on the exact size of the country's housing deficit vary but they're all in the millions.

• According to the most recent estimates from Freddie Mac, the country is short about 3.8 million units of housing — meaning there aren't enough homes to keep up with the number of new households that are forming.

A few reasons for the shortage: Lack of available labor to build homes; and regulations over land use and zoning.

• NIMBYism, or the pushback that new construction gets, as Freddie Mac explains.
• Plus, homebuilding activity cratered after the Great Recession, and never totally recovered; then, remote work increased the demand for space (more on both below).

The big picture: The median home price is now 40% higher than it was in January 2020, before the pandemic (though it’s inched down 3.1% over the most recent year), per Redfin.

Between the lines: Some believed higher mortgage rates would push prices down much more, making homes more affordable, said Daryl Fairweather, chief economist at Redfin.

• The rationale was that the economy would slow, as a result of the Fed's rate-hiking campaign, and folks would lose jobs or their incomes would fall and they'd have to sell.
• "That just hasn't happened," she said.

That's because the economy has remained surprisingly strong, so most homeowners don't have any financial reason to sell.

• There's also the golden handcuffs: Most mortgage holders stay put, hanging on to their record-low rates.
• Plus, so many people moved during the pandemic-era boom — 60% of mortgage holders bought their homes or refinanced their mortgage in the last four years, per Redfin — that fewer people want to move now.

The impact: That all translates into low inventory on the market — there are 39% fewer homes for sale now than five years ago, Redfin reported last week.

• That's a major factor in keeping prices from falling much.

It could be worse: House prices would probably have increased by at least 15% over the past year had the Fed not raised rates, Fairweather said.

• A lot of first-time buyers were initially scared off when mortgage rates started rising last year, said David Ostrowsky, a senior loan officer at CrossCountry Mortgage in the New York City metro area.
• Now, he's seeing them come back and try to buy — and they're getting caught up in bidding wars.
• "Buyers are not scared away by interest rates. They're handcuffed by a lack of inventory," he said.

Editor's note: This story has been updated to reflect that Redfin has corrected an earlier statement to note that 60% of mortgage holders have either refinanced their loan or lived in their home for four years or less (not that they have lived in their homes for less than four years).

The shortage has its roots in the financial crisis when the housing bubble burst and upended everything in the market. Builders were wiped out and many never returned to the business.

• Back then, there was a glut of inventory on the market — and builders had little incentive to build new homes.
• They never returned to building single-family homes at the rates seen before the crash.

The work-from-home revolution caused a significant quantity of workspace to move into residential neighborhoods, Axios' Felix Salmon writes.

Why it matters: That alone is enough to significantly raise demand for housing.

By the numbers: Take NYC as an example. If you look at square feet per resident and per employee in the Big Apple, the average household fits about 2.5 people into about 1,000 square feet. If one of those people has access to an external office, that provides another 150 square feet of space for working in.

• When that person works from home, the household is going to feel more cramped than usual unless it expands by about 150 square feet — that's a substantial increase, at 15%.
• It's no coincidence that new apartments built after the pandemic hit were 10% larger than new apartments built in the previous ten years, per real estate services firm CBRE.

Between the lines: Suburban homes are subject to the same dynamics. Someone who wants a home office wants a room with a window and a door that closes so no one can hear their Zoom calls.

• In the housing industry, that's known as a "bedroom" — which means that adding workspace to a home effectively means going up an entire rung on the property ladder by adding an extra bedroom.

Go deeper: Felix reports on this and more in his new book, "The Phoenix Economy."

Over the past two decades, developers have moved away from building affordable homes and apartments, and toward luxury units — exacerbating the shortage of affordable housing for everyone, Emily writes.

By the numbers: The share of available rental space that is non-luxury — defined as Class B or C buildings — fell below 50% this year from 67% in 1999, per Moody's Analytics.

• The math of building Class A is better for investors, said Thomas LaSalvia, head of commercial real estate economics at Moody's Analytics.
• "If you're able to lease up all of this Class A space and you have higher margins above the cost, then as a developer, that's what you're going to go after."

Meanwhile, what's happening in the rental market is also happening in the homebuyer market; builders have mostly focused on larger, pricier homes.

Go deeper: America's growing rent burden

There's more square footage in the U.S. devoted to parking cars than housing humans, according to Henry Grabar of Slate in his eye-opening new book "Paved Paradise: How Parking Explains the World."

Why it matters: For developers of affordable housing, strict requirements around parking — mandating a certain number of spaces per unit — make it more expensive, often prohibitively so, Emily writes.

• Efforts to convert office buildings into residential apartments — a move becoming more urgent now as offices in many cities stand half-empty — are also stymied by burdensome parking requirements.

Zoom in: In Seattle, required parking makes 10%-20% of the cost of constructing a multi-family building, Grabar writes, driving up rent by 15%.

• In California, it's tens of thousands of dollars extra per unit — a cost paid for by tenants whether or not they drive, he told Vox.

Striking stat: "If the Empire State Building had been built to the minimum parking requirements of a contemporary American city, for example, its surface parking lot would cover 12 whole blocks."

• Imagine how that asphalt landscape would change the character of New York City.

The bottom line: As Grabar puts it: "More parking means less housing."