Shelters require 1 herb to be eligible for homestead upgrades.
I regularly see 2+ herbs in “Storage” in my shelters, yet the UI is showing me I do not have enough herbs yet.
This is preventing me from being able to progress into a Tier 3 Town Center as I can’t achieve the 25 homestead requirement. I have 5 or so shelters all with all criteria met including herbs in storage and indefinitely await upgrades to Homesteads.
Welcome to the forum. 
Is it herbs that are the problem? Do you have enough building materials/labourers/builders to upgrade the houses and have you turned auto upgrade off (top right of the screen)
Did you disable auto upgrades?
In addition to Auto Upgrade, the most frequent reason for my Shelters not upgrading when Desirability and Herb requirements are met is not having 2 kinds of Food available to them. That early, I usually don’t have farms set up yet, so there is no bread, vegetables or root vegetables, and Food is almost all meat or smoked meat (or fish, it’s all considered the same) and Greens, and even if you have all of that in Storage, if the Grocer hasn’t stocked a variety in the Market, the Shelter will show Unavailable for Food. Just a suggestion: it’s always the first thing I check now when residences aren’t upgrading.
Thanks for all the suggestions! I HAD accidentally turned off auto upgrades. Much appreciated.
What was misleading though is that even with auto upgrades off, manually selecting to upgrade the shelters did nothing.
Yes, it’s strange atm that we have a button for that option, but it doesn’t work. Also what is strange is that the herb icon stays grey even when you have herbs in a house; it ought to go green like the others methinks, but it doesn’t.
That’s not a button. 
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