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The housing market has offered another sign that the American dream is getting further out of reach.
The number of American homeowner households shrank in the second quarter, the first year-over-year contraction since 2016, according to a new Redfin analysis of data from the US Census Bureau.
At the same time, America’s population of renters is swelling. The number of renting households in the US climbed 2.6% year-over-year last quarter.
The shift is largely being driven by affordability issues and uncertainty lingering over the economy, which are holding back prospective buyers, Chen Zhao, Redfin’s economics research head, said in new research.
“People are also getting married and starting families later, which means they’re buying homes later—another factor that may be at play,” Zhao added.
Housing’s deep-freeze
The US housing market has been frozen over for a while. Homebuyers are still hesitant to dip their feet into the market, in part due to high mortgage rates and near-record home prices.
The average 30-year fixed mortgage rate hovered around 6.5% in the week ending August 28, according to Freddie Mac data. The rate has cooled from its peak in 2023, but remains elevated compared to levels during the pandemic, when the number of US homeowners rose sharply.
Home prices also remain elevated when compared to levels leading up to the pandemic. The median sales price of homes sold in the US clocked in at $410,800 the last quarter, up 29.5% over the last five years.
The high barrier to entry is evident in how many homes are piling up on the market. Active existing home inventory rose to 1.5 million in July, according to data from the National Association of Realtors, up from a trough of 1.1 million in December. The market also looks to have 34% more sellers than buyers in the market, Redfin said in a separate analysis in May.
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