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Yemen is one developing country in the Middle East, which suffers from housing shortage. Unprecedented rapid urban growth coupled with lack of infrastructure has led to the problem of housing shortage for the low-income group in Sana'a, the capital city of Yemen. Consequently, informal housing patterns are observed clearly in some sectors of the city. The low-income group has built this kind of housing urgently and in some cases immediately as the final and only solution, yielding serious implications on the quality and safety of the houses. The overriding objective of this study was to identify the significant factors, which have influenced the construction cost of housing in Sana'a to resolve the housing shortage for the low- income group. Specific objectives have included determining the factors causing housing shortage for low-income group in Sana'a; justifying the significant factors influencing the cost of low-cost housing; and recommending to relevant authorities in Yemen to improve housing policies to mitigate the housing shortage in Sana'a.