A new report on the U.S. housing sector finds that activity remains subdued through the first part of the year as high costs suppress demand.
The Joint Center for Housing Studies of Harvard University released its annual “State of the Nation’s Housing” report on Wednesday, which found that existing home sales remain near the lowest level in three decades that was first reached in 2023.
Sales of new homes remained relatively unchanged, while rental retention rates rose and new occupancies declined. New construction starts dipped 1% over the last year, driven by a 7% decline in single-family starts.
“Although supply shortages are still a major concern, depressed demand became a headline in housing over the past year,” the report said, noting slower growth in the number of homeowner households as well as the number of renters compared with a year ago.
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The rate of growth of homeowner households declined by half and caused homeownership rates to decline for the second straight year. Additionally, the year-over-year increase in the number of renters in the first quarter of 2026 was less than half of what it was a year earlier.
Economic uncertainty has weighed on housing demand, with employment growth slowing from a gain of 1.5 million in 2024 to just 116,000 in 2025.
Consumer confidence dropped by more than 20 percentage points in 2025 and fell further in the first part of 2026 due to the Iran war, reaching an all-time low in April.
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“Without a job, graduates are less likely to form a new household or move to a new region,” the report said. “Without confidence in employment, families are less likely to move or make a big purchase like a house.”
High costs and the lack of affordable housing options is also contributing to the weaker demand, as households are struggling with high home prices and interest rates.
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The report said that the median prices for new and existing homes are both over $400,000 and that existing home prices have risen 54% since 2020 and are about 5-times the median income – a level well above the ratio of 3-times that prevailed in the 1990s.
Mortgage rates are over 6%, which makes the payment on a median-priced home $3,100 in the fourth quarter of 2025, up from $1,700 in early 2020. That has pushed the income needed to afford that payment to more than $120,000 – a significant increase from $66,000 in 2020.
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