Government data released on Friday shows the number of people waiting for social housing has fallen 7.5 per cent in five months to June to 55,880 applicant households.
But wait times are trending upwards as the wait list caters for a surge in people requiring priority assistance.
More than 7500 families and singles were listed for priority assistance on June 30, up 1100 in a year.
Those in the priority category are assessed as having an urgent need of housing and an inability to resolve that need themselves in the private rental market.
The surge for urgent help means the median wait time is now three months, up from 2.4 months a year ago.
That is also forcing average wait times out for other applicants by another four months, to 22.5 months.
The median wait time for general applicants in northern NSW has reached four-and-a-half years.
"This is the harsh reality of our housing crisis," Housing Minister Rose Jackson said on Friday.
"Every day, thousands of vulnerable people wait for the day they have a secure roof over their head.
"The only way we're going to get them off the housing waitlist is by getting people into homes."
About 815,000 Australians - or one in 25 households - live in social housing, which is operated by governments or not-for-profits.
Social housing waiting lists have been growing across the country, reaching 188,300 in 2022, according to the Australian Institute of Health and Welfare.
Data on NSW social housing was published only once a year by the previous government, often several months out of date.
The last release in early January was of a snapshot at June 2022, showing the wait list at 57,889 people.
But by the time of that release, the wait list had jumped by another 2066 on the way to a peak of 60,491
Ms Jackson said the data would now be released every month to improve transparency.
"Everyone deserves access to safe and secure shelter," she said.
"We need to highlight the depth of housing crisis we're in to keep the pressure on for the need to deliver more homes."
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