Locked Out and Locked In

America’s housing market is showing signs of deep paralysis

Locked Out and Locked In: Why the US Housing Market Is Stalled

America’s housing market is showing signs of deep paralysis—caught between record-high home prices, spiking mortgage rates, and a persistent shortage of new housing. Our latest chart provides a stark overview of the crisis.

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Buyers Locked Out, Owners Locked In

Over the past five years, the S&P CoreLogic Case-Shiller Home Price Index has climbed more than 60%, pricing many would-be buyers out of the market. At the same time, mortgage rates have surged from pandemic-era lows of around 2% to over 7% by 2023, drastically increasing monthly payments and reducing affordability.

This double whammy—of high prices and high borrowing costs—has effectively frozen much of the market. First-time buyers can’t afford to enter, and existing homeowners are reluctant to move, refinance, or list their properties, knowing they’d be trading in ultra-low mortgage rates for significantly higher ones. In other words, they're “locked in.”

Supply Side Struggles

New housing starts, a key indicator of future supply, have also declined since their pandemic peak in 2022. With builders facing rising input costs and cooling demand, construction activity has fallen sharply—further tightening inventory and exacerbating the imbalance between supply and demand.

A Bifurcated Market

The pain is not evenly distributed. According to Redfin data, some metros are seeing price gains—like Detroit, New York, and Pittsburgh—while others, especially in overheated Sun Belt markets like Tampa, Dallas, and Jacksonville, are experiencing meaningful year-over-year declines.

This divergence underscores a broader theme: while national averages paint a picture of stagnation, local dynamics continue to shift based on affordability, job markets, and migration trends.

Bottom Line:
The US housing market is gridlocked. With affordability at historic lows and little new supply coming online, buyers and sellers alike remain on the sidelines. Until either prices correct or interest rates ease, homeownership will stay out of reach for many—and housing turnover will remain frozen in place.

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