The most vulnerable were losing out, she said.
Social Housing Minister Paula Bennett said changes had been made to better support people in need of social housing.
"Social housing is assessed based on need, and I agree that 1,055 days is too long for a vulnerable New Zealander to wait. However, I note that in this situation two alternative properties were declined by the person who was already housed, including one they did not like because it had birds nesting in a nearby tree."
MSD encouraged people to be flexible about the area they lived in when seeking social housing.
"We are also reviewing the reasons people can decline an offer of a suitable property."
Ms Bennett said that the transfer of responsibility for managing the social housing register from Housing NZ to the Ministry of Social Development in April last year had resulted in a more transparent calculation and representation of the average wait time to be housed.
"The Government is acutely aware of the housing pressures many vulnerable New Zealanders face, which is why we're increasing the amount of social housing places available by 3,000 over the next three years, to house more people for the duration of their need.
"At present, there are not enough properties of the right size in the right place to meet demand. For example, in Auckland 60 per cent of demand on the register is for one-bedroom and two-bedroom properties, but they only make up 40 per cent of supply.
"We're growing a more diverse supply of social housing by increasing the role registered Community Housing Providers play, and ensuring Housing New Zealand makes better use if its properties and land."