Housing affordability, then and now
Marketplace Morning Report

Housing affordability, then and now

B2Upper-intermediateOctober 21, 20266 min
  • Business & money

The housing industry got a heap of bad news on Tuesday. New construction was down, and pending home sales dropped to their lowest level since 2001. Higher mortgage interest rates are to blame. The average rate for a 30-year fixed-rate loan is just shy of 7.5%. Average mortgage rates in the '70s were higher, though, and didn't lead to a housing affordability crisis like today's. What gives? And later: lessons from a San Francisco Bay Area universal basic income program. Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly...

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0:00

Mortgage rates are actually right in line with historical averages, so why do they feel so high? From Marketplace in Washington, I'm Kimberly Adams. The housing industry got a whole heap of bad news this week.

0:16

We found out yesterday that housing starts, that's a measure of new construction, plunged in September, down nearly 7.5% year on year. Meanwhile, pending home sales dropped to their lowest level since 2001. You can blame the cratering numbers on the persistently higher mortgage interest rates.

0:34

The average for a 30-year fixed is just shy of 7.5%. But if you zoom out and take a more historic view, that rate is actually lower than the average mortgage rate since 1971, which is about 7.2% and yet those rates, high by today's standards, didn't lead to a housing affordability crisis like today's.

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