Rhode Island is Failing in Affordability and Homebuilding: Can Governor McKee Fix It?

Rhode Island may be small in size, but its housing challenges loom large. 

The latest Realtor.com® State-by-State Housing Report Card gives the Ocean State an F—one of the lowest marks in the country—reflecting severe shortages in new construction and worsening affordability for middle-class buyers.

The rankings were released in February. Since then, President Donald Trump has pressured large homebuilders to increase construction nationwide. In a post on his Truth Social platform in early October, he accused major builders of hoarding lots to prop up prices—likening them to OPEC, which restricts oil output to maintain high prices.

“They’re my friends ... but now, they can get Financing, and they have to start building Homes. They’re sitting on 2 Million empty lots, A RECORD,” Trump wrote. He urged Fannie Mae and Freddie Mac to intervene and “get Big Homebuilders going” in order to “restore the American Dream.” 

But is there more Rhode Island’s own government can do to fix the problem?

Prices up, building down

Realtor.com data shows Rhode Island’s median listing price at $537,521 in 2024, while the state’s median household income stood at $80,791. 

That imbalance pushed its Realtor Affordability Score down to 0.47, near the bottom nationally. The state accounted for just 0.1% of all new-home permits despite holding 0.3% of the U.S. population, giving it one of the weakest permit-to-population ratios in the nation. 

A 43.8% new-construction premium—meaning new homes are priced far above existing ones—underscores the lack of affordable new supply.

Building slows while demand climbs

Nationally, new builds have become an affordability lifeline. 

“America is short more than 4.7 million homes, and every new home built helps close that gap while fueling local economies," says Shannon McGahn, NAR’s Executive Vice President and Chief Advocacy Officer. "NAR research shows that the U.S. has faced a persistent housing shortage for more than a decade, driving up prices and limiting options for buyers. Expanding housing supply creates jobs, supports small businesses, and affords families the opportunity to build generational wealth.”

The Realtor.com New Construction Insights 2025Q2 report shows that across the U.S., new-construction prices per square foot are now lower than those of existing homes, and new-build listings are up more than 37% since 2020. 

The South is leading that growth, while the Northeast—including Rhode Island—remains the nation’s most inventory-constrained region. The report notes that the Northeast has the highest percentage difference between existing- and new-home shares, and new construction in the region remains largely a luxury product, priced more than 50% above resale homes.

Perhaps that’s why nationally, only 15% of buyers purchased a new home versus 85% of buyers who purchased a previously owned home, according to the 2024 National Association of Realtors® profile of buyers and sellers. 

Gov. McKee promises housing reform

However, Gov. Dan McKee is trying to turn the tide. In speaking with Realtor.com, he laid out his commitment to his Housing 2030 plan, which aims to build 15,000 new homes by the end of 2030.

“Rhode Island’s grade in Realtor.com’s report card reflects challenges we know all too well—housing costs are too high, and construction has not kept pace with need,” McKee told Realtor.com. ”My Administration has been taking action to change that.”

Part of the plan is to “seek solutions that will allow a more accurate account of permits issued across the state to better track building progress,” he explained, as well as signing legislation to speed up permitting and zoning reforms to allow residential use in some commercial zoning districts

Another highlight of the initiative is how it will be funded, passing the largest housing bond in state history: $120 million approved by 65% of voters.

“Importantly, $20 million of the housing bond is dedicated specifically to expanding low-cost homeownership options, supporting a key priority of my administration and addressing a critical need for Rhode Islanders looking to buy their first home,” McKee explained. 

Additionally, $219 million in federal State Fiscal Recovery Funds has been allocated for the production and preservation of over 2,300 housing units. 

“Building a stronger economy and a healthier Rhode Island starts with ensuring access to quality housing,” McKee said at the signing ceremony last August pushing through a six-bill legislative package to further these initiatives. “These investments are delivering results with thousands of new units built, preserved or in the pipeline”.

Rebuilding the foundation

Rhode Island’s F grade underscores how far the state has to go, but it seems to be moving in the right direction. In fact, McKee was joined by Michelle Bleau, director of real estate development at One Neighborhood Builders, last August when he ceremonially signed the six-bill legislative package. Given the nonprofit commitment to improving Rhode Island by building homes, it was a ringing endorsement.

Additionally, the National Association of Home Builders’ Blueprint to Address the Housing Affordability Crisis outlines many of the same steps McKee’s administration is now taking: removing zoning barriers, easing permitting delays, and encouraging cost-effective building standards.

Whether these measures can reverse years of underbuilding remains to be seen. But with prices climbing faster than incomes and demand for homes far outpacing supply, Rhode Island’s new housing laws could mark the first serious effort in years to make the smallest state’s housing market accessible again.