The housing shortage is driving the price of homes up across the country, and first-time homebuyers are now being squeezed out of the market, unable to afford any of the limited number of homes available.

According to mortgage giant Freddie Mac, the U.S. housing market is currently about 4 million homes short of the current demand. This number represents the shortage of homes available for sale, not a shortage of empty homes. Of course, that's part of the problem.

In Reno and other up-and-coming cities like it, a homebuying boom has rapidly driven up prices, with Reno home prices increasing 27% over the past year. Housing in these cities has come to value luxury over affordability, effectively barring out entry-level homebuyers and creating artificial gated communities.

For reference, in 1982, 40% of the newly constructed homes in the U.S. were entry-level. By 2019, that number had dropped to just 7%, according to NPR. The shift away from entry-level homes, homes of around 1,400 square feet or less, has reportedly been relatively consistent in home construction for some time.

"It's a huge problem if you think about the fact that home equity accounts for the bulk of wealth for the overwhelming majority of Americans," Sam Khater, Freddie Mac's chief economist, told NPR.

This trend away from more affordable homes has a cause that's received broad consensus: the rapidly increasing cost of construction, from labor costs to materials. With the population moving away from the relatively open countryside towards the tightly-packed cities, the price of land for new housing is more expensive than ever, far surpassing the rate of inflation.

"It's really the value of the land that matters most when it comes to home prices," Khater said. "Many people are trying to crowd in the same cities that are the most productive and most affluent and offer the most opportunity, but high unaffordable home prices prevent many Americans from doing so."

Homebuilders have to take into account the price of land when they're deciding what sort of home to build on that land. When the land is more expensive, builders will try to offset that expense by building a larger, pricier home, according to T&M Building Company president Greg Ugalde. For Ugalde in Connecticut, the only way he can afford to build entry-level homes is by not including any extras or upgrades in the build.

"To me, it should be a building with maybe a parking stall. You should have some yard space, but it shouldn't be out of control," Greg told NPR. "Homebuyers seem to be obsessed with this idea of luxury amenities. And homebuilders are completely willing to give them that."