Which indicator is often used to signal that there is not enough housing supply to meet demand?

• A. Low vacancy percentage
• B. High vacancy percentage
• C. Average days on market
• D. Rising rents

Answer: (A)

In housing markets, the clear sign of not enough supply relative to demand is a low vacancy rate. When only a small share of rental units are empty, it means demand is outpacing what’s available, signaling a shortage of housing. This tightness tends to push rents higher as renters compete for limited options.

High vacancy would indicate the opposite—more units are available than buyers or renters need. Average days on market measures how quickly a unit rents, which can be influenced by both supply and demand and isn’t as direct a gauge of supply tightness. Rising rents reflect price pressure, but they don’t by themselves prove there aren’t enough units, since rents can rise for various reasons.