The Welsh government says it has set an "ambitious" target of providing 12,500 homes over the next four years.
It says 7,500 affordable homes will be built and 5,000 empty properties will be brought back into use.
Housing Minister Huw Lewis said the "tough challenge" would be financed by the Welsh government and housing providers.
Opposition parties have called for transparency on how the target will be met.
Mr Lewis said: "The target will not be easy to achieve.
"However, it is vital that we provide these much-needed homes which will not only satisfy people's housing requirements but will also create jobs and help stimulate the economy.
"A total of 12,500 homes is an ambitious goal, but one I believe is deliverable. Local authorities, housing associations and the private sector will all have to work together to attract funding from other sources and to achieve the best possible value for money in order to deliver much needed homes for the people of Wales."
He said the targets would be achieved by securing additional social housing grant funding of £22m; accelerating land release for housing and encouraging co-operative and mutual home ownership.
Last year a report from Cambridge University, commissioned by the Welsh government, found that more than 280,000 new homes are needed in Wales over the next 20 years.
That is around 14,000 a year, but only 5,500 were built last year and the rate has been falling annually since 2007.
Opposition parties have stressed the need for a clearer definition of affordable homes and say the government must publish regular updates of its progress towards the target.
'Smoke and mirrors'
Liberal Democrat housing spokesperson Peter Black said: "If we are to take these targets seriously the government need to provide proper definitions and ensure that there is a timely publication of statistics on a quarterly basis so that we can monitor how they are doing and hold them to account.
"There has to be transparency in this process and much less of the smoke and mirrors that characterised similar targets set by the [former Labour-Plaid Cymru coalition] One Wales government."
Plaid Cymru's Llyr Gruffydd welcomed the announcement but said there were still questions to be asked about how the targets will be met.
"Capital investment projects such as these are exactly what we have been calling for in order to keep the economy moving and minimise the impact of austerity measures - not only will this announcement ensure that 7,500 families will be able to access affordable housing, but it will also be good news for the construction industry and private sector as they benefit from building contracts," he said.
"There are still questions to be asked about how these targets will be met. This is a major commitment for the Welsh government and it needs to replicate the open, inclusive approach demonstrated by Plaid Cymru if it wants to meet its target."
Homelessness charity Shelter welcomed the Welsh government's target saying there are 90,00 households currently on waiting lists for council or social housing.
But Ceri Dunstan of Shelter Cymru added that "further clarification is needed on the conditions of the loans and the status of the properties that benefit".
"We believe that if there is public money involved then there needs to be a public benefit, such as ensuring the property remains within the 'affordable' secotr at least until the loan is repaid," she added.