The State of the Housing Market

Guest post by Deputy Secretary of the Treasury Wally Adeyemo

June 17, 2021

I. The State of the Housing Market

Ensuring more Americans have access to affordable housing is critical to creating a pathway to opportunity. Numerous studies have linked access to stable, high-quality, affordable housing to reductions in child poverty, improvements in educational performance and developmental outcomes, and increases in lifetime earnings. Especially for communities and people of color, affordable housing constitutes a critical rung on the ladder of economic prosperity. In total, economists estimate that the nation’s lack of affordable housing costs the U.S. economy roughly 2 percent of GDP each year or more.

The COVID-19 pandemic and ensuing economic crisis upended the personal finances of many American families over the past year and put too many families at risk of losing their homes — with millions of households missing rent and mortgage payments. About 1.7 million loans were more than three months past due in the first quarter of 2021, and roughly 7 million renter households are behind on rent, including about 3 million at risk of eviction. These financial strains have been particularly pronounced in communities of color, where the pandemic’s negative economic effects hit hardest and which have been deprived of an economic cushion by generations of discrimination.

The Biden Administration has worked hard to mitigate these pressures. We have put in place a number of programs and policies to keep families in their homes, including an extension of the moratoria on evictions and foreclosures; additional mortgage forbearance; and the American Rescue Plan’s roughly $22 billion Emergency Rental Assistance Program and $10 billion Homeowner Assistance Fund, which provide relief to struggling renters and homeowners, respectively.

But there is more we need to do to fully address the long-term structural problems driving the shortage of affordable housing. Declining construction and lower housing supply, as well as economic shocks and tightening credit conditions due to the pandemic, have made it even harder to find affordable homes to rent or buy. According to one estimate, the annual production of new housing units lags behind new…