Privately owned housing starts fell to a seasonally adjusted annual rate of 1.43 million units last month, down 8 percent from the revised estimate in May at more than 1.55 million. 

Single-family starts also declined last month, falling by 7 percent from the previous month to 935,000, the data showed. Starts for buildings with five or more units was 476,000. 

Numbers picked up last month largely due to persistent lack of inventory in the existing market, which has pushed potential buyers toward new homes. Although existing sales picked up slightly in May, they were down more than 20 percent from a year ago. 

And this trend toward newly built homes continues to boost homebuilders' confidence. 

Home builder confidence in the housing market grew for the seventh straight month, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index reached its highest level since June 2022. 

“The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers,” NAHB Chairman Alicia Huey, said in a statement alongside the data’s release. 

“At the same time, builders are troubled over rising mortgage rates approaching 7% and continue to grapple with supply-side challenges, including ongoing scarcity of electrical transformer equipment and growing concerns about lot availability.” 

Mortgage rates have grown steadily in the weeks following the Federal Reserve’s decision to hold off on another rate hike. The benchmark 30-year fixed mortgage rate averaged 6.97 percent last week, reaching its highest level since November. 

The announcement is part of an effort by the administration to expose rental housing junk fees, including application fees, which can increase the housing provider's costs to run a background or credit check on a prospective renter.

The background: Biden pledge to fix ‘unfair’ economy resonates with Americans

Additional charges and convenience fees tend to pop up for renters, including fees to pay rent online or to get trash pickup that was otherwise assumed to be included in the final price, senior administration officials said. 

The Department of Housing and Urban Development issued a white paper for members of Congress, governors, and local leaders with policy ideas to address rental housing junk fees. States like Colorado and Rhode Island have already enacted such policies, like prohibiting brokers or rental companies from accruing application fees, senior administration officials said.

President Biden has been focused on exposing junk fees across industries. Last month, the White House announced ticket companies — including Ticketmaster and SeatGeek — pledged to eliminate junk fees and roll out all-in pricing numbers for customers.

Biden convened the fifth meeting of the White House Competition Council on Wednesday at the White House to announce the new actions, which the White House said is all part of its so-called "Bidenomics" agenda.

“Bidenomics is about increasing competition, not stifling competition,” Biden said at the top of the council meeting.

“Folks are tired of being played for suckers… and it’s about basic fairness. Today, we’re taking more action,” he added.

Other actions announced Wednesday include steps to help lower food prices and promote competition in agriculture markets by ramping up enforcement measures to stop price fixing.

The Department of Agriculture launched enforcement partnerships with 32 state attorneys general from both sides of the aisle to combat price-gouging and anti-competitive practices in food and agricultural markets. The attorneys general will issue on-the-ground assessments on whether companies in the food and agricultural industry are price gouging.

Additionally, the administration will act to provide clarity about enforcement laws to prohibit anticompetitive mergers. 

The Department of Justice and the Federal Trade Commission on Wednesday released its new proposed merger guidelines for public comment. The updated guidelines aim to give the public, businesses and workers clarity about how law enforcement agencies evaluate mergers based on antitrust laws.

The updated guidelines explain how mergers impact people on a daily basis and how people could benefit from mergers, like for workers to seek higher wages or for farmers to get more profit based on the markets, senior administration officials said.

“I’ve said before, capitalism without competition isn’t capitalism, its exploitation,” Biden said on Wednesday, adding that these new actions are building on momentum out of the administration to reduce costs for Americans.

Biden signed an executive order establishing the competition council two years ago with the goal of promoting competition.

Updated at 3:59 p.m.

“While these technologies have enormous potential, they also carry risks of violating fair lending laws and perpetuating the very disparities that they have the potential to address,” the Fed’s vice chair of supervision, Michael Barr, said at the National Fair Housing Alliance (NFHA) 2023 national conference.

While new artificial intelligence tools could relatively cheaply expand credit to more people, machine learning and AI may also exacerbate bias or inaccuracies inherent in data used to train the systems or make inaccurate predictions, Barr added.

The Fed recently announced two policy initiatives to address appraisal discrimination in mortgage transactions.

On June 1, the Fed and several agencies requested public comment on a proposed rule to implement quality control standards in automated valuation models. Under the proposed rule, institutions that engage in certain credit decisions would be required to adopt policies, practices and control systems that ensure a "high level of confidence" in automated estimates and protect against manipulation of data.

A week later, the same agencies invited public comment on guidance to help financial institutions incorporate “reconsiderations of value” into their home appraisal process. Valuations may contain errors, omissions or discrimination that could affect the value of the appraisal, the agencies argued, and a reconsideration of value could help mitigate the risk of improperly valuing real estate.

“Homeownership is an important way for families to build wealth, and we should give them every opportunity to share in those benefits,” Barr said, noting he was “fully supportive” of both policy initiatives.

A quartet of federal agencies, including the Federal Trade Commission and the civil rights division at the Department of Justice, announced in April their commitment to cracking down on automated systems that cause harmful business practices.

“Fair lending is safe and sound lending,” Barr said, soliciting applause from the audience.

“When have you ever heard a vice chair of the board of governors speak against algorithmic bias?” NFHA President and CEO Lisa Rice asked. “I’m telling you, I’m excited.”

Home prices are ticking up amid a sustained housing shortage, making it even more difficult for people to enter the market.  

Mortgage rates remain well above recent historic lows, and even with new homes coming on the market soon, according to recent data, experts don't expect first-time buyers to see lower prices right away.

Home prices are moving up largely due to inventory constraints, especially at the lower end of the market, where fierce demand leads to bidding wars. The intense competition drives home prices higher — and often above what many would-be homeowners can afford.

Home prices are heating up again

After falling during the second half of 2022 amid the Federal Reserve’s bout with inflation, home prices are rising again and nearing their peak, according to a recent report from Black Knight.

Black Knight’s data showed five straight months of price gains have erased the slight drop seen last year. 

“Firming prices have now fully erased the pullback we tracked through the last half of 2022 and lifted the seasonally adjusted Black Knight [Home Price Index] to a new record high in May,” said Andy Walden, Black Knight vice president of enterprise research, in a statement. 

Walden added that figures suggest annual price growth flatlines for a “short time before inflecting and trending sharply higher in coming months.” 

Yelena Maleyev, an economist with KPMG, told The Hill housing price growth is “still a supply story, especially in the existing housing market."

She said there are roughly half as many homes for sale as there were in 2019, and even fewer listed for $300,000 or lower. Owners who purchased homes when interest rates were near record lows are not eager to sell, Maleyev added.

“Those are getting the bidding wars," she explained, “And that's still going to be a problem going into the rest of the year simply because of what we're calling this mortgage winter."

"A majority of homeowners are locked into a sub-4 percent mortgage rate and so they're not expected to list their homes easily unless there's some sort of life event in which they do have to list their homes," she added. 

Mortgage rates are staying high

Mortgage rates soared as the Fed battled inflation by raising interest rates.  

The Fed’s rate hiking cycling drastically cooled housing demand for a time as mortgage rates met already-high home prices and pushed would-be buyers to the sidelines.  

Demand rebounded as mortgage rates trended downward from their peak above 7 percent last fall in the early part of year and has remained steady even as rates have moved toward their peak in recent months. 

Average mortgage rates reached their highest level since November last week, when the 30-year fixed rate mortgage hit 6.97 percent, data from Freddie Mac showed. 

But the latest inflation data could bode well for prospective buyers. 

"Low inflation means low mortgage rates,” Lawrence Yun, chief economist at the National Association of Realtors, said in a statement. “Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”

Housing costs are driving inflation

Consumer inflation figures released by the Labor Department last week showed housing costs continued to drive it.  

The consumer price index revealed the slowest annual inflation since 2021, coming in at 3 percent. This is down from 4 percent in May. 

Yet housing costs continue to prop up inflation, the data showed, fueling more than 70 percent of price growth in June. 

Maleyev explained part of housing’s sustained pressure on inflation is due to lagging data figures, noting prices seen at the end of last year are just showing up in the CPI. 

“We already have in our assumption that inflation, the housing part of inflation, will start to be stationary into the end of the year. So that's good news,” Maleyev said.  

“We need that to help bring overall CPI down, especially at the core. The concern for inflation in general is that when housing is doing this part in disinflation the other inflation figures will start to re-inflate and re-accelerate.”

The Fed could raise rates again

The central bank paused its interest rate hikes in its last meeting in June to evaluate the impact of previous increases.  

Since then, mortgage rates have moved up close to 7 percent, while inflation has shown signs of cooling. 

Still, the Fed could continue its monetary tightening and raise rates further this year. 

Fed Governor Christopher Waller said during a speech last week he sees room for two more rate hikes this year.

“I see two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target. Furthermore, I believe we will need to keep policy restrictive for some time in order to have inflation settle down around our 2 percent target,” Waller said. 

George Ratiu, chief economist for Keeping Current Matters, told The Hill recent economic indicators validate the Fed’s monetary approach while showing a “soft landing” could be achieved without damaging consumer confidence and spending. 

“At next week’s FOMC meeting, the central bank’s rate-setting body could well choose to stay put and not push rates higher,” Ratiu said. 

“On the upside, with inflation showing clearer signs of moderation, the Fed seems to have some breathing room to evaluate incoming indicators for a couple of months until its next meeting in September.”

There were 185,580 U.S. properties with foreclosure filings, which include default notices, scheduled auctions or bank repossessions, in the first half of the year, the report from nationwide property data provider ATTOM showed.

This is up 13 percent from the same period last year and up 185 percent from two years ago, when there were slightly more than 64,000 in the first six months of the year. A federal ban on foreclosures ended in July 2021, by which point most state bans had also elapsed.

“Similar to the first half of 2022, foreclosure activity across the United States maintained its upward trajectory, gradually approaching pre-pandemic levels in the first half of 2023,” ATTOM CEO Rob Barber said in a statement. 

“Although overall foreclosure activity remains below historical norms, the notable surge in foreclosure starts indicates that we may continue to see a rise in foreclosure activity in the coming years,” he added. 

Nationwide, 0.13 percent of properties had foreclosure filings in the first six months of the year, with the highest numbers recorded in Illinois, New Jersey, and Maryland. The largest increases were from Maryland, Oregon, Alaska, West Virginia and Arkansas. 

Even so, filings are still down from historic norms, according to the data. 

ATTOM’s report also revealed foreclosure filings are down significantly from pre-recession levels from 2006-08; there were 278,912 per quarter from the first quarter of 2006 to the third quarter of 2007. 

And through the first half of 2023, foreclosures are far below what they were during the global recession. In the first six months of 2010, there were 1.64 million foreclosure filings. 

Meanwhile, monthly data shows foreclosure filings continue to move upward. In June, 1 in every 3,972 properties had a foreclosure filing. And 24,019 U.S. properties started the foreclosure process, up 3 percent from May.

American banks are losing interest, consumer advocates say, in writing mortgages for inexpensive homes. 

Their exodus from the small-mortgage market leaves a patchwork of risky, poorly regulated home-loan alternatives that can propel the most vulnerable buyers into debt or homelessness. 

Twenty years ago, the median home cost less than $200,000, and banks routinely approved mortgages for half that amount. Today, the median home costs $437,000, and buyers struggle to find banks that will write mortgages for less than $150,000. 

Instead, many buyers turn to alternative financing, a universe of personal property loans, lease-purchase agreements, land contracts and seller-financed mortgages. Typically, those transactions are both riskier and costlier than a mortgage, and they fall outside the regulatory cocoon that protects homebuyers from fraud and trickery. 

In the worst cases, borrowers can lose their home and their solvency. 

“People think that they are on the path to owning their own home, when in fact they are on a path to financial disaster, forfeiting all of the money that they have paid in, as well as the place that they thought was their home,” Sen. Tina Smith (D-Minn.) said. “Too often, these contracts are designed to fail.” 

Smith spoke Tuesday at a Senate hearing with the dramatic title, Exploiting the American Dream: How Abusive Land Contracts Prey on Vulnerable Homebuyers. 

Sen. Jon Tester (D-Mont.) termed the industry’s bad actors “a bunch of folks who should have a special place in Hell.” 

Buyers stray outside the protective red tape of the mortgage industry for many reasons. They may have low credit scores, or lack the funds for a down payment, or wish to avoid the deep document dive that attends a mortgage application. The purchaser may lack financial literacy. The lender may be a family friend. 

“My clients tend to have trusted the seller, the people who approached them with a situation that maybe sounded too good to be true,” Elizabeth Goodell, supervising attorney at Mid-Minnesota Legal Aid, said at the Senate hearing. 

But consumer advocates and researchers also point the finger at banks. Mortgage lenders are growing increasingly reluctant to approve loans in the $100,000 range, because those transactions no longer turn much profit. 

“It’s gotten hard for lenders to originate mortgages under about $150,000 profitably, because the size of a mortgage is a major factor in how much revenue the lender earns,” said Alex Horowitz, a project director at The Pew Charitable Trusts who studies housing. 

The fixed costs of a mortgage have risen dramatically in recent years, from about $3,700 in 2009 to $10,600 in 2022, Horowitz said.  

Each mortgage costs more, in part, because banks are spending more money on overhead, propping up an industry that swelled in the mortgage-refinance boom of recent years. Now, new loans are relatively scarce, and lenders favor large sums. Regulatory costs have risen apace.  

A Pew analysis found that 38 percent of mortgage lenders did not issue a single small mortgage, for a home priced under $150,000, between 2018 and 2021.  

The mortgage, the standard tool for homebuying, factored in only 26 percent of home sales under $150,000 in those years. 

The small-mortgage exodus matters less in New York or Los Angeles, cities filled with million-dollar homes. It matters more in Akron, Ohio, and Cedar Rapids, Iowa, and Erie, Pa., where the median home is priced below $200,000. 

When home buyers can’t get a mortgage, they find other ways to borrow. Pew estimates 7 million Americans used alternate financing to purchase the homes they live in now. A disproportionate share are Hispanic or Black buyers or earn less than $50,000. 

The most prevalent mortgage alternative, Pew found, is the personal property loan. Commonly used to purchase manufactured (i.e., mobile) homes, personal property loans cover only the home, not the land beneath. They treat the house much like a car or refrigerator. 

Personal property loans often come with sky-high interest rates. In many states, lenders can repossess the dwelling with little provocation. And most mobile homes sit on rented land, a predicament landowners can exploit.  

At Tuesday’s hearing, Tester, the Montana senator, narrated an increasingly frequent scenario: “bad actors buying up manufactured housing communities and then, once they buy them, they jack up the lot rent, because they can.” 

When the landowner raises rents in a mobile-home community, “that consumer is out of luck,” said Sarah Bolling Mancini, co-director of advocacy at the National Consumer Law Center. “Because most of these homes cannot be moved: They will fall apart.” 

Other buyers resort to land contracts. In this arrangement, the seller extends credit to the buyer. It works sort of like a mortgage, but with a key difference: The seller often keeps the deed to the property and remains its legal owner until the buyer makes the final payment.  

Like personal property loans, land contracts generally lack the standard protections of a mortgage. 

“If the seller has something go wrong in their life, and there’s a lien put on the home, the buyer could lose the home even if they’re making all the payments,” Horowitz said. 

Another alternative-financing option is the lease-purchase, or rent-to-own, agreement. The landlord becomes a seller, the tenant a buyer. The tenant generally pays a large upfront fee in exchange for an option to buy the home in a set span. A portion of the monthly rent, often set well above market rates, might go toward the purchase price.  

Here, too, the buyer has few protections. A seller may try to back out, and the terms of the lease-purchase agreement may allow them to keep the money. 

In a seller-financed mortgage, the seller acts as the lender. The deed transfers to the buyer, as in a mortgage. But without the due diligence of a mortgage, the buyer could end up with a home that is uninhabitable, or one with competing claims on its title.  

Across the board, Horowitz said, “consumers usually pay more, often much more, to use alternative financing than the same consumer would pay in a mortgage.”  

Consumer advocates are concerned about another rising home-loan peril, this one often targeting low-income homeowners.  

Throughout the refi boom of 2020 and 2021, the mortgage industry sustained itself largely by refinancing mortgages at attractive rates. Over the past year, that market has dried up, as interest rates have risen to decade-long highs. (Nearly 7 percent, for a fixed 30-year mortgage, as of this month.)  

To scare up business, lenders are lobbying homeowners to apply for a “cash-out” refi, offering cash to the owner as an incentive to refinance the mortgage.  

In the low-interest days, millions of homeowners took on new mortgages that deposited dollars into their bank accounts, often with a lower rate to boot.  

Today, a cash-out refinance makes little sense: Yes, you’ll come away with money in the bank, but you may also wind up paying twice as much interest on the new mortgage.  

“You are trading your existing mortgage, which, for most people, is in the 3-percent range, for a mortgage in the 6- to 7-percent range,” said David Silberman, a senior fellow at the Center for Responsible Lending. 

Desperate homeowners fall for the pitch, Silberman said, even if it means higher mortgage payments for the next 30 years.  

The money saved not paying on loans during this period helped some borrowers build savings or handle the rising costs of household goods and other necessities, including rent. 

Some analysts predict that the added costs of loan repayments could slash savings and force borrowers into difficult housing situations. 

“While the income needed for monthly rent payments remains the same with the resumption of loan payments, renters especially from the lower- and middle-income group will be forced to make difficult housing decisions and sacrifice some aspects to the quality of life,” Moody’s Analytics senior economist Lu Chen and economist Mary Le told The Hill. 

Borrowers who immediately resume payments in October will owe roughly $275 per month, Moody’s projected in a recent report. That could lead those in debt, especially low income borrowers, to look for alternatives, such as moving in with friends or family or finding a less expensive home.

Payments could also take a toll on younger borrowers, whose student loans make up a larger share of their individual debt compared to older generations. Student loans make up about 30 percent of the total debt for borrowers between the ages of 18 and 29, Moody's found.

Separately, polling conducted by The College Investor found that most debt holders are concerned about payments resuming, while more than half do not feel financially ready.

About 57 percent of 1,200 borrowers polled reported using the money saved by not making student loan payments to supplement essential costs, such as food and housing.  

Homeowning dreams delayed by payments

The extra monthly costs — along with rising mortgage rates — may also put the dream of homeownership out of reach. 

“The pause along with other pandemic incentives have driven up the savings for many, but higher cost of living caused by inflation and elevated interest rates made saving for future mortgage payments more financially challenging,” Moody’s Chen and Le said. 

“For first time buyers, this resumption of student loan payments serves as a disadvantage as it can make home ownership less accessible or even delay their ability to purchase a home,” they added. 

'A pipe dream at best'

Jeffrey Eden, a graduate student who originally graduated into a recession with a bachelor's degree in 2011, told The Hill that student loans over the years have limited his options and even served as an incentive to pursue more education. 

Now in the second year of his second master’s program, Eden, originally from Rhode Island, will enter the initial phase of repayment in forbearance. But he knows once he graduates again, the burden of debt will drastically impact where he lives. 

“The cost of living in my home state is simply too much. Of course, like so many others, homeownership would be great, but I’m a pragmatist and have made my peace with the fact that such a thing is a pipe dream at best,” Eden said. 

“We were saving for many years to move to NYC, but one car repair, two clinic visits, and of course, student loans, depleted those savings years ago. We’re essentially stuck and trying to survive; that is my generation’s way, after all,” he added. 

How housing costs spiked

Housing costs have risen substantially throughout the pandemic for both renters and homebuyers. A lack of supply on the rental side met significant demand and was compounded by the reentry of potential homebuyers, who were driven back toward rentals by high mortgage rates. 

Although rent prices are cooling in parts of the country, they remain stubbornly high while evictions are rising in several cities. Full-time workers across the country need to earn $23 per hour to afford a modest one-bedroom apartment at a fair market price, according to a report from the National Low Income Housing Coalition (NLIHC).

Workers earning minimum wage must work 86 hours per week to afford the same rental, according to the report.

Andrew Aurand, vice president of research at NLIHC told The Hill that low-income renters are already making sacrifices to make ends meet and spending far less on other necessities to pay for housing. 

“If they are forced to move because of an eviction or even if they decide on their own that they have to move, it can be very difficult for them to find a home they can afford and, instead, sometimes move-in with family or friends, which is often not sustainable, or into housing that is inadequate for them either in size or quality.” 

What borrowers can do as payments resume

As borrowers brace for impact, student loan experts are offering advice on how to prepare. Borrowers could consider signing up for automatic payments — which could save them about 0.25 percentage points on interest — make a budget and update information with their loan servicers, student loan expert Mark Kantrowitz told The Hill. 

Meanwhile, the Biden administration is implementing new programs that could cover some interest and lower monthly payments. 

The administration said eligible borrowers can enroll in the REPAYE plan, which will be converted to the SAVE plan this fall. 

The new plan will cut monthly payments from 10 percent of discretionary income to 5 percent and ensure unpaid monthly interest won’t cause a borrower’s debt to grow if they’ve been making their monthly payments. 

Still, student loan repayment notices are going out, setting in motion what Eden called an existential dread.  

“I started tallying up the monthly cost on top of all our other expenses and sure, it’s doable, especially if I skip a meal here and there and just ignore when I’m sick or something. It’s why I’m eager to either land a professorship or look into PhD study,” he said.

Updated at 9:30 a.m.

The Stop Predatory Investing Act, introduced by Sens. Sherrod Brown (D-Ohio), Ron Wyden (D-Ore.) and others, would restrict investors who purchase 50 or more single-family rentals from deducting interest or depreciation on those properties from their taxes.

“In too many communities in Ohio, big investors funded by Wall Street buy up homes that could have gone to first-time homebuyers, then jack up rent, neglect repairs, and threaten families with eviction,” Brown said in a statement.  

“Our bill will help prevent corporate landlords from driving up local housing prices, and put power back in the hands of working families, who need a safe, affordable place to live and raise their children,” he added. 

The bill would also offer incentives to investors to sell single-family rentals back to homeowners or community nonprofits and help bolster housing supply by allowing owners to continue receiving tax deductions on homes financed using low-income tax credits. 

Investors' share of the housing market dropped by a record amount in the first quarter of the year, accounting for just 18 percent of purchases, data from real estate brokerage Redfin shows. 

Despite their declining share, investor presence in the market can still create challenges for buyers, especially for those looking for starter homes, Redfin senior economist Sheharyar Bokhari said in May.  

“Investors have gravitated toward more affordable properties due to still-high housing costs and rising mortgage rates, which has left first-time homebuyers with fewer starter homes to choose from,” Bokhari added. 

The Redfin data showed that investors purchased $27.5 billion worth of homes in the metros the company tracked in the first quarter, and more than 41 percent of homes they purchased were starter homes. 

Redfin noted the data could also include purchases made through a family trust for personal use.

A report from Point2, an online real estate marketplace, finds that 64 percent of Los Angeles properties are listed above $1 million. Seven-figure listings are the norm in four other large cities: San Francisco (62 percent), San Jose (61 percent), San Diego (59 percent) and Boston (53 percent). 

All of those million-dollar listings invite a question: In an era of sharply higher mortgage rates, will they sell?  

Million-dollar homes became standard in many affluent markets between 2020 and 2022, a span that saw median sale prices rise more than 40 percent across the United States, from $329,000 to $479,500. But prices have slid just as sharply in 2023, dropping nearly 10 percent to $436,800 in a single quarter.  

The reason is rising rates. Since July 2021, the average rate on a 30-year mortgage has risen from 2.9 percent to 6.8 percent. 

During the run-up in real estate prices, the share of U.S. homes valued at more than $1 million doubled from 4.2 percent to 8.6 percent, according to a Redfin analysis. The figure has since slid to 7 percent.  

In the days of the 3-percent mortgage, the million-dollar home felt within reach for many American buyers. Those days are gone. Higher mortgage rates mean higher monthly payments. 

“Ballooning mortgage costs have cooled buyer demand,” said Jeff Tucker, a senior economist at Zillow. “Homes are staying on the market longer than they did during the peak of the pandemic frenzy, and that’s especially true for the highest-priced homes in each market.” 

Higher rates make lower-priced homes more attractive. Sales prices for entry-level homes rose 8 percent between 2022 and 2023, according to a report from Zillow.  

Top-tier homes, meanwhile, declined in value for the first time in a decade. San Francisco, San Diego and Seattle all registered double-digit drops in top-tier home prices, Zillow found. 

“Those are the markets that have cooled the most, in terms of demand,” said Taylor Marr, deputy chief economist at Redfin. 

The volume of luxury home sales nationwide declined by 45 percent between 2022 and 2023, the steepest drop in at least a decade, according to Redfin.  

“Uncertainty is the main factor driving the luxury-market slowdown in Los Angeles,” said Alin Glogovicean, a Redfin real-estate agent. “Everyone is kind of at a standstill.” 

A report from the Institute for Luxury Home Marketing found more encouraging data for sellers in recent months. The median sale price for single-family luxury homes remained essentially flat at about $1.4 million between May 2022 and May 2023.  

“Despite lingering uncertainty outside the luxury real estate market, the steadiness of prices, sales, and inventory levels have resulted in a consistent increase in the demand for luxury properties during the first five months of 2023,” the report states.  

Most luxury homeowners locked in mortgages at historically low rates. Selling the home now would mean taking on a new mortgage at a higher rate. That fact, coupled with the aforementioned uncertainty, is prompting many owners not to sell.  

The low inventory of luxury homes for sale has kept prices competitive, delivering much-needed leverage to sellers, Marr said.  

“They’re not the starter home. They’re the home the family moves into for more space in the suburbs,” Marr said. “Those are the ones that are the most in demand, and have also seen the most drop in supply.” 

Even after the pandemic-era surge in home prices, million-dollar homes remain relatively rare in most large cities. Seven-figure sales prices represent 41 percent of all listings in New York, 34 percent in Seattle, 26 percent in Washington, D.C., 17 percent in Chicago, 11 percent in Houston and 7 percent in Philadelphia.  

The MBA’s Market Composite Index, which measures mortgage loan application volume, decreased last week by 4.4 percent on a seasonally adjusted basis from the week before. 

“Mortgage applications fell to their lowest level in a month last week as rates for most loan types increased," Joel Kan, the MBA’s vice president and deputy chief economist, said in a statement. 

The 30-year fixed interest rate increased to 6.85 percent, Kahn said, the highest since the end of May. Applications for mortgages also fell for the first week since May, as higher interest rates spooked some buyers.

“Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country," Kan said.

Mortgage rates have fluctuated widely for more than a year amid the Federal Reserve’s attempt to curb inflation by raising interest rates.  

The Fed’s efforts have impacted buyer affordability as mortgage rates, combined with already higher prices, have pushed many would be buyers out of the market — especially young and lower-income buyers. 

The central bank paused its rate hiking cycle last month after 10 consecutive increases, but officials projected at least two more interest rate hikes this year.

Since then, mortgage rates have risen slightly, though separate home sales data shows buyers may be adjusting to the new normal of mortgage rates above 6 percent. 

New home sales jumped by 12.2 percent in May to a seasonally adjusted annual rate of 763,000 units — up 20 percent from a year ago.

Rising prices in the first quarter of the year pushed up the income needed to afford a home to its highest level since 2007. 

Major homeownership expenses last quarter required about 33 percent of a family’s monthly income, a report from nationwide property data provider ATTOM showed. Typically, lenders call for a buyer's monthly debt-to-income ratio not to exceed 28 percent. 

Now after three quarters of declines, the price for a median single-family home rose to $350,000 — up 10 percent from the first quarter. 

ATTOM’s report shows prospective buyers needed to earn at least $75,000 annually to afford a median-priced home in about half of the nation’s housing markets. 

The highest yearly wages needed to afford a median-priced home were highest in markets along the East and West coasts. 

Wage requirements were highest in Manhattan County, N.Y., where prospective buyers need to earn more than $383,000 annually to afford a typical home. Manhattan is followed by San Mateo County, Calif., where buyers need an income higher than $361,000 for a typical home purchase.  

Boomers and millennials fight for homes as housing market cools

Three California counties — Marin, Santa Clara, and San Francisco — round out the top five. Buyers need earnings of $352,153 in Marin, $340,803 in Santa Clara, and $327,906 in San Francisco County. 

California's Santa Cruz, Alameda, Orange and Napa counties and Kings County, N.Y. — which includes Brooklyn — completed the top 10. Wages higher than $200,000 were necessary in each of these counties to afford a median-priced home. 

The report also notes where wage requirements to afford a median-priced home are lowest. Three of the counties were in Pennsylvania. Prospective buyers in Cambria County, Pa., must earn just less than $15,000 to afford a typical home. 

Housing prices skyrocketed during the COVID-19 pandemic and subsequent economic boom. Rising mortgage rates exacerbated the housing affordability squeeze and have failed to make a dent in home prices.

Mortgage rates have settled above 6 percent in recent months after soaring from historic lows amid the Federal Reserve’s fight with inflation. And recent sales data indicates buyers are adjusting to the rates.  

New home sales surged by 12.2 percent in May to a seasonally adjusted annual rate of 763,000 units. Sales were 20 percent higher than they were a year ago.

A surge in evictions in some cities and states is returning rates to pre-pandemic levels and highlighting how renters of color and renters with children are facing the brunt of America’s housing crisis.

Eviction rates have been steadily increasing after dropping dramatically due to renter protection measures passed during the COVID-19 pandemic. As federal assistance has ended, the fate of renters has largely been left in the hands of state and local governments.

The Eviction Lab at Princeton University, the largest nation’s eviction database, reported a 78 percent increase in evictions from 2020 to 2021 in the 10 states and 34 cities it monitors. And the crisis has likely gotten worse since then as remaining eviction moratoriums have ended. 

The trends are not impacting American renters equally. Nonwhite tenants and tenants with families are feeling the brunt of America’s housing crisis. 

“We know that, disproportionately, the families that are facing eviction in this country have children,” Peter Hepburn, associate director at the Eviction Lab, told The Hill. 

In May, Sen. Ron Wyden (D-Ore.) and Rep. Suzanne Bonamici (D-Ore.) announced the Build Housing with Care Act of 2023, which would address housing disparities by promoting affordable housing that is co-located with child care.

“In Oregon, there are over 110,000 renters who make less than $27,000 a year and pay over half their income to rent,” Wyden said in a statement to The Hill. “And making rent is even more challenging when the cost of childcare can reach the cost of a mortgage.”

Since being referred to committees in the House and Senate, this bill has not appeared to make any progress.

“Having greater access to both affordable housing and childcare would be enormously beneficial to low-income households,” Hepburn said of the bill.  

Lawmakers are also applying pressure over the racial disparities in America’s eviction rates. Last week, Rep. Nikema Williams (D-Ga.) pressed the Housing and Urban Development Department's inspector general on the issue during a House Financial Services subcommittee hearing. 

“As of last month, over 1.8 million people reported that they were at risk of eviction or foreclosure within the next two months,” Williams said at the hearing. “Nearly 54 percent are Black or Latino.”

Rep. Bonnie Watson Coleman (D-N.J.) also brought this problem to the House’s attention in a resolution about the unique difficulties Black women face in the U.S.

“Black women have the highest rate of eviction in the country,” Watson Coleman said in a statement to The Hill.

The Eviction Lab’s findings supported Williams’s and Watson Coleman’s concerns. 

“We’ve been able to demonstrate that Black renters routinely face much higher eviction rates than their white counterparts,” Hepburn said. “In many cases, we’re talking twice as high.” 

The emerging eviction data shows abiding inequalities more than five decades after the Fair Housing Act was passed in 1968, which ostensibly ended practices of racial exclusion in the housing market. Households with children were not labeled as a protected class until Congress amended the act in 1988. 

While the data appears to contradict the spirit of the Fair Housing Act, Hepburn said there was a lot of work to be done to prove it was being explicitly violated. 

The Lab’s Eviction Tracking System’s (ETS) breakdown of state and city eviction data showed an eviction’s disproportionate effects on renters of color in some states where rates are rising the fastest. 

As of June 3, Virginia had the highest amount of filings out of all the states that ETS tracks. The counties with the two highest eviction filing rates since June 2022 had largely Black renter populations.

In recent years, ETS showed 68 percent of those who faced eviction in Philadelphia were Black despite making up only 42 percent of the renters. 

New York City and Las Vegas, the cities with the highest number of eviction filings, according to ETS’s latest data, had similar disparities. The highest number of eviction filings since spring 2022 for each city were in areas with predominantly non-white renters. 

Washington, D.C., also has a history of high eviction rates. In 2018, Eviction Lab's National Eviction Map reported an eviction filing rate of 17.2 percent for the city, which topped the national average by 9.39 percent. A study from the Brookings Institution found that of evictions filed in D.C. from 2012-16, approximately 78 percent took place in Black-majority neighborhoods. 

D.C. Mayor Muriel Bowser has attempted to tackle the racial disparities in the housing market through The Black Homeownership Strike Force. Bowser recently allocated $18 million to the committee’s Black Homeownership Fund and other recommendations.

However, Bowser remains short of her 2019 goal to create 36,000 additional housing units by 2025. On top of that, her latest budget proposed slashing some of the city’s housing programs funding.  

While the issue is largely being left to states and cities to deal with, Hepburn said there is plenty of room for federal action. 

“We’ve talked with folks at a number of the agencies about ways they could engage with this or be involved with this work,” Hepburn said when asked about the federal government’s interest in the lab. “It remains to be seen what comes next.”

Nationwide home affordability declined again in the second quarter of the year as rising prices pushed up the wages necessary to afford a home, according to a new report. 

Major homeownership expenses last quarter now require about 33 percent of a family’s monthly income, the report from nationwide property data provider ATTOM showed.  

Homes were less affordable in 98 percent of counties with data to analyze when compared to historical averages. This marks the highest debt-to-income ratio since 2007.

Buyers needed to earn $75,000 annually to afford the typical home in half of the markets ATTOM analyzed. 

After three quarters of declines, the median single-family home value rose 10 percent from the first quarter to $350,000 — the largest increase in more than a decade, the company found. 

“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices. With that has come another blow to how much house the average worker around the country can afford,” ATTOM CEO Rob Barber said in a statement. 

“Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess,” Barber continued. “But any predictions of a market demise were certainly premature, and house hunters are feeling the pinch.” 

Home prices fell in the back half of 2022 amid the Federal Reserve’s fight with inflation that pushed up mortgage rates to more than 7 percent in November. 

Mortgage rates have since moderated but settled for the last few months above 6 percent.

Last week, the average 30-year fixed rate moved up slightly to 6.71 percent, according to Freddie Mac.

“Mortgage rates have hovered in the 6 [percent] to 7 percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” Freddie Mac Chief Economist Sam Khater said last week. 

New home sales surged by 12.2 percent in May to a seasonally adjusted annual rate of 763,000 units. Sales were 20 percent higher than they were a year ago.   

“New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction,” Khater continued. “The improved demand has led to a firming of prices, which have now increased for several months in a row.”

The report from real estate brokerage Redfin found that the typical home is selling for $383,000, about $4,000 lower than its record high last June, as a lack of homes for sale has kept prices from falling lower.

This is also the smallest year-over-year drop in four months, the report found. 

A lack of availability is sustaining the high prices, the report notes, with new listings falling 27 percent from a year earlier during the four weeks ending June 25. This is the biggest drop since the beginning of the pandemic.  

Persistently high mortgage rates are also hurting the market as buyers who might be interested in moving are tied down by the low rate they secured during the pandemic-era housing boom.  

The 30-year fixed-rate mortgage ticked up slightly this week to 6.71 percent and has been hovering above 6 percent for months. 

Yet some economists are encouraged by home sales numbers even as mortgage rates higher than 6 percent seem to be the new normal for homebuyers. 

“Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” Freddie Mac Chief Economist Sam Khater said in a statement. 

New home sales surged by 12.2 percent in May to a seasonally adjusted annual rate of 763,000 units. Sales were 20 percent higher than they were a year ago. 

“New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction,” he continued. “The improved demand has led to a firming of prices, which have now increased for several months in a row.” 

More than half of small-businesses owners polled by the small business network Alignable reported their rent was higher in June than it was six months ago. Some noted their rents have increased by 20 percent. 

Alignable's June Small Business Rent Report is based on responses from 4,801 randomly selected small-business owners polled between June 5-27, along with data from 18 months of previous surveys.   

Close to 40 percent of small business owners struggled to make their payments on time, tying April for the highest delinquency rate so far this year. 

The latest figures follow more than a year of rising inflation and increasing interest rates that have occurred as small businesses attempt to recover losses incurred during the pandemic. 

The Federal Reserve has raised interest rates from near 0 during the pandemic to around 5.25 percent in 15 months to fight inflation.

Alignable found that more than 60 percent of these businesses have yet to earn the monthly revenue they made before the onset of COVID-19. And more than half earned less than they did this time last year. 

The poll also showed that minority-owned small businesses are having a tougher time than any other demographic group surveyed. These small businesses experienced a record high 58 percent delinquency rate in June — 17 percentage points higher than the rate in February. 

Minority-owned small businesses reported struggling with rising interest rates and building up cash reserves, while 65 percent said their rents have increased in the last six months. 

At the state level, New Jersey small businesses had the highest delinquency rate in June at 48 percent, up from 39 percent a year ago. Businesses in Florida and Georgia followed closely behind with delinquency rates at 46 and 44 percent respectively. 

Yet small businesses in several states are showing signs of recovery, with some states breaking record lows. The delinquency rate in Washington fell by 22 percent from May to 13 percent. In Colorado, the rate dropped by 14 percent from the previous month.