Millions of Americans continue to struggle with high housing costs.

Even though the number of cost-burdened households, those paying more than 30 percent of their income for housing, declined slightly in 2012, falling by 1.7 million, conditions remain dire for many, according to The State of the Nation’s Housing 2014, an annual report from Harvard University’s Joint Center for Housing Studies.

In 2012, 40.9 million households—more than a third of U.S. families and individuals—paid more than 30 percent of their income on housing costs, up more than 9 million from 2001.

Most of the improvements seen in 2012 were on the homeownership side. If you look just at the number of cost-burdened renters, their numbers increased slightly for the sixth straight year to 20.6 million. Nearly half of America’s renters were cost burdened, while more than 1 in 4 renters paid more than 50 percent of their income for housing, which is defined as being severely cost burdened.

Income declines have played a leading role in the increase in cost burdens for renters. According to the report, median monthly rental costs have been on the rise while renter incomes have been on the decline. Median renter incomes were 13 percent lower in 2012 than in 2001, while the median rent paid increased by 4 percent over the same period.

Faced with high housing costs, many households have to make difficult trade-offs that could affect their safety and health. Some find housing they can afford, but the units may be in disrepair or in poorer-quality neighborhoods. Severely cost-burdened households spent 39 percent less on average on food and 65 percent less on health care compared with similar households living in affordable housing.

Compounding the issue is the lack of affordable units available to these renters. The private sector struggles to develop housing at a cost that is within reach for many Americans. In 2012, there were only 3.3 million affordable and available housing units for 11.5 million extremely low-income households—29 affordable and available rentals for every 100 lowest-income households.

Also, according to Department of Housing and Urban Development (HUD) estimates, 19.3 million households qualified for rental subsidies, but only 4.6 million received assistance. With rising rents across the nation and funding cuts at HUD, the number of households the agency can help is decreasing. Its fiscal 2013 budget saw a $3 billion reduction, with about 42,000 fewer households receiving vouchers than the prior year.

In addition to the rental assistance program cuts at HUD, the contracts or affordability restrictions are set to expire on more than 190,000 subsidized units each year over the next decade, according to the National Housing Preservation Database. Many older rentals also are disappearing from the market because they have fallen into obsolescence. Of the 34.8 million rentals in the nation in 2001, approximately 1.9 million were demolished by 2011.

Typically new multifamily construction without subsidies is out of reach for lower-income households. For new units built in the preceding four years, the median monthly gross rent was $1,052. To spend 30 percent of their income on rent for these new units, households would need to earn more than $40,000 a year.

“There is almost an unlimited demand for affordable housing,” said Daryl Carter, chairman of the National Multifamily Housing Council as well as founder, chairman, and CEO of Avanath Capital Management, during a live webcast for the report’s release on Thursday.

To help solve the demand for affordable housing units, Lisa Sturtevant, director of the Center for Housing Policy and vice president for research at the National Housing Conference, said that the low-income housing tax credit program, which has been one of the primary drivers for the creation of affordable housing, needs to remain as well as be expanded.

She added that local governments have a role to play as well, by creating inclusionary housing policies and other zoning changes to aid the development of more affordable rental housing.

A positive note from the report on the nation’s housing challenges is that the homeless population continues to decline. In 2013, homelessness rates had fallen for all the major at-risk groups: 11 percent among individuals in families, 12 percent among the chronically homeless, and 6 percent among veterans.

The annual report cited other key multifamily trends from 2013, including:

  • Renter growth was well above the 400,000 annual average of the past several decades;
  • Households younger than 35 made up a quarter of the rental growth from 2005 to 2013, while the share for households aged 55 to 64 was nearly as large;
  • The number of multifamily starts, more than 300,000, was the highest level since 1998;
  • The national rental vacancy rate decreased to 8.3 percent, the lowest since 2000; and
  • Originations of multifamily loans increased by 13 percent.