Housing — United States · Synthesis

Prices at record highs, a frozen market. Residential real-estate prices have reached record levels (S&P/Case-Shiller indices), continuing to rise moderately in 2024 despite the rise in rates. Combined with mortgage rates around 7%, this situation has sharply degraded affordability and frozen transactions: owners holding an old low-rate loan have no interest in selling, which dries up supply ("lock-in effect").

An affordability crisis. Housing costs (both purchase and rental) weigh ever more heavily on household budgets, particularly those of the young and first-time buyers. The share of "cost-burdened" households (devoting more than 30% of their income to housing) is high, especially among renters (HUD, Harvard Joint Center for Housing Studies).

Record homelessness. HUD's point-in-time count recorded more than 770,000 homeless people on a given night — the highest level ever measured, recently rising under the effect of housing costs and the end of support programs. It is the most visible indicator of the crisis.

Insufficient construction. Housing starts (≈ 1.3-1.4 million homes per year) remain below long-term needs, after a decade of underbuilding following the 2008 crisis. The cumulative housing deficit is estimated at several million units.

A stable homeownership rate. The owner-occupancy rate stands at around 65-66% (Census), broadly stable, but with significant gaps by age, income and origin — homeownership access for younger generations and minorities receding in the face of prices.

Interest rates and unfreezing the market. The trajectory of mortgage rates, tied to Federal Reserve policy (cf. Prices category), is the main variable: an easing could revive transactions, while durably high rates would prolong the freeze.

Reviving supply. Reducing the housing deficit means lifting the local zoning constraints that limit densification, a debate increasingly present at the state and city level. It is the structural lever of affordability.

Fighting homelessness. Policies vary widely across cities and states (housing first, shelter, repressive approaches). With housing cost being the main determinant, effectiveness largely depends on affordable supply.

Inequalities in homeownership access. Reducing the gaps in homeownership access by origin and age is a matter of social cohesion (cf. Social cohesion category), real-estate property being the main wealth vehicle of American households.

The open questions. Three issues will shape the period: (1) restoring affordability in the face of prices and rates; (2) reviving construction by lifting zoning constraints; (3) stemming homelessness, at its highest measured level.

Placed in its environment, the United States shares with its peers a housing affordability crisis, with a homeownership rate in the average and one particularity: a mostly 30-year fixed-rate mortgage that accentuates the lock-in effect.

Three takeaways. (1) Homeownership: in the upper average. The U.S. homeownership rate (≈ 65-66%) is close to the United Kingdom and Canada, above France (≈ 58%) and markedly above Germany (≈ 47%).

(2) The "lock-in" effect. The predominance of the 30-year fixed-rate loan, a U.S. specificity, amplifies the market freeze when rates rise — a mechanism less marked in countries with variable or adjustable rates.

(3) A shared crisis. The deterioration of affordability since the rise in rates and underbuilding are phenomena common to developed countries; the scale of visible homelessness, for its part, is more marked in certain American metropolises.