San Diego issues thousands of housing permits, but supply still trails demand

Even as San Diego approves thousands of new homes, the city’s housing supply continues to lag behind its growing population. According to the City of San Diego’s 2025 Annual Report on Homes, released in late September 2025, the city permitted 8,782 new homes in 2024, marking the second consecutive year of major growth in housing production. However, housing experts and city officials note that this pace still falls short of what’s needed to meet affordability goals outlined in the city’s Housing Action Package 2.0 (Inside San Diego, 2025; Times of San Diego, 2025).

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A closer look at the permit surge

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The City reports that 97% of income-restricted homes and 85% of all permitted units were located in transit-accessible areas, demonstrating a focused effort to align housing growth with mobility goals. Much of the increase came from San Diego’s incentive programs: the “Complete Communities: Housing Solutions” and the “Affordable Home Density Bonus.” Together, they accounted for over 4,500 homes, including more than 2,285 accessory dwelling units (ADUs). The city continues to lean on ADUs as one tool to help close the housing deficit (City of San Diego, 2025).

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Nevertheless, the city remains behind the Regional Housing Needs Allocation (RHNA). San Diego must plan for 108,036 new homes in the 2021–2029 cycle; meeting that goal will require sustained high permit volumes for the remainder of the decade (City of San Diego Housing Element).

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Why more permits aren’t enough

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Issuing permits is only the first step; turning them into completed homes is harder. Delays in financing, construction challenges, material shortages, and labor constraints all slow the conversion from permit to occupancy. Neighborhood resistance to densification — driven by concerns about parking, traffic, or character — also prevents some projects from moving forward. And while permits are up, many of the newly permitted units are market-rate rather than income-restricted, so affordability gaps persist (Times of San Diego, 2025).

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Future impact

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Despite strong permitting momentum, San Diego’s housing market still faces a deep imbalance between supply and demand. The city must now translate its high permitting numbers into completed, livable homes — especially affordable and middle-income units. If current trends continue, San Diego could see significant progress toward its 2029 Regional Housing Needs Allocation (RHNA) goals, but only with consistent follow-through on construction and affordability enforcement. Continued policy reform, targeted incentives for ADUs and infill housing, and streamlined project delivery will determine whether San Diego can truly close its housing gap in the decade ahead.

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Timeline & next steps

• 2023: San Diego permitted 9,701 new homes — the city’s highest level in years, with many projects near transit corridors and infill zones (City of San Diego 2024; KPBS). ‍
• 2024: The city permitted 8,782 units, continuing an upward trend and reflecting a two-year surge in permit activity (City of San Diego 2025 Annual Report; City social posts, Sept. 2025). ‍
• September 29, 2025: The City released its 2025 Annual Report on Homes, confirming steady gains but warning that production must accelerate to meet RHNA goals. ‍
• Now: The city is focused on ensuring permitted units are completed, improving infrastructure, and preserving affordability in high-demand neighborhoods. ‍
• Future: Tracking permit-to-completion rates, expanding ADU development, reforming approval processes, and prioritizing affordable, transit-oriented projects will be critical to closing the housing gap.

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Quick tip: If you live in San Diego or are a property owner or developer here, monitor new permit activity concentrated near transit or in infill neighborhoods — that’s where policy is pushing growth and where opportunities are most likely to appear.

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Xavier Rodriguez is the CEO of ADU Geeks, San Diego’s leading ADU consulting and project management firm. In 2024, the company was ranked No. 1 on the San Diego Business Journal’s Fastest Growing Private Companies list in the Small Business category, achieving 594.3% revenue growth.