Housing New Zealand has ended tenancies for 986 state homes in the past two years, after reviews found the tenants could afford market rent.
The most frequently affected tenants were couples with children.
It said most of the affected tenants were couples with children who no longer needed social housing because they could afford market rent.
Applicants with a greater need - mostly solo parents with children - had already gone into 654 of the homes.
More than 180 properties were retired as social houses. Housing New Zealand said 67 of those were sold - 51 of them to the existing tenants.
Labour's housing spokesperson, Phil Twyford, says kicking out families with young children from state homes makes no sense. And he says it damages the life chances for those children because they're moving around so much.