Premier Chris Minns revealed on Monday the state had completed 48,000 homes in the past 12 months - well short of the 75,000 annual target agreed last week at national cabinet.
During the meeting, federal, state and territory leaders agreed to build a collective 1.2 million homes over the five years from July 1, 2024, increasing an existing target by 200,000 homes.
On new completions, NSW is well behind neighbouring Victoria, which built 58,000 homes in the past year.
"We have a bigger population, a bigger increase in rent prices, a bigger increase in housing prices, more migrants moving to this state than any other state over the next two years ... and yet we're dramatically lagging behind the biggest state, Victoria," Mr Minns said.
"We've got a long way to go when it comes to supply of housing; social, affordable and private rental, as well as private sale in NSW."
Housing Minister Rose Jackson and Mr Minns reiterated that high-quality, higher-density apartments were the best approach to increasing supply in Sydney, rather than the city continuing to expand outwards.
"This government's been really clear from the beginning that we are going to need to see more density if we're going to solve the housing crisis," Ms Jackson said.
The NSW government on Monday revealed its plan to include more low-cost homes in the redevelopment of one of Australia's largest social housing estates.
At least 50 per cent of the about 3000 homes in the soon-to-be rebuilt Waterloo estate, in Sydney's inner south, will be social and affordable housing, up from 34 per cent under the previous government's plan.
Additionally, 15 per cent of the new social and affordable homes will be set aside for Indigenous people, who make up a large part of the local community.
Mr Minns pledged to better consult residents who will be moved during the public housing overhaul.
Hundreds of tenants will be relocated starting from mid-2024 during the development, but they will have the right to return once the renewal is complete, the government says.
All existing residents will be offered alternative accommodation at one of two new public housing sites being built within the same area.
"Everyone in this community will be relocated within this community," Ms Jackson said.
"We have two sites that are coming online specifically for this purpose."
