US Housing & Mortgage Markets
The US housing market is splitting into two diverging stories: nominal price appreciation has nearly stalled and turned negative in real terms across most major metros, while renter cost burdens keep rising even as rent growth cools — a reminder that the level of costs, not the rate of change, is what households actually live with.
PRICES: THE DECELERATION HAS GONE NATIONAL
The February Case-Shiller data released this week makes the trend hard to ignore. The national home price index rose just 0.7% year-over-year — down from 0.8% in January and continuing a slide from the mid-single-digit gains of 2023. McBride flags a striking milestone: for the 9th consecutive month, CPI outpaced home price appreciation, with inflation running 1.7 percentage points above that 0.7% gain, meaning real home values have been in decline for three quarters running.
The geographic story has shifted. What began as a Sun Belt correction has now spread. More than half of major US metropolitan markets posted year-over-year price declines in February. Denver leads the losers at -2.2%, displacing Tampa (-2.1%), with Seattle (-2.0%), Los Angeles, and Washington now joining the negative column. The FHFA data tells a similar story: nationally, prices were unchanged in February (up just 1.7% YoY), with the Mountain division down 0.7% year-over-year and off 1.1% month-over-month. The one bright spot is the Middle Atlantic, up 4.2% YoY — a regional divergence that underscores how much local supply dynamics now dominate the national headline.
Month-over-month, the Case-Shiller national index did post a 7th consecutive seasonally adjusted gain (+0.09% MoM), but McBride notes the monthly increments have been shrinking. Sequential stability, not recovery.
CREDIT QUALITY: SINGLE-FAMILY CALM, MULTI-FAMILY STRESS
The delinquency picture for single-family mortgages remains contained — for now. Freddie Mac's serious delinquency rate edged down to 0.60% in March (from 0.61% in February), sitting right at pre-pandemic norms. Fannie Mae's rate ticked down to 0.58% (from 0.60%), actually below pre-pandemic lows. Both are up modestly year-over-year (Freddie: 0.59% → 0.60%; Fannie: 0.56% → 0.58%), but these are nothing like the 4-5% readings from the post-bubble years or the 3%+ peaks of August 2020.
McBride's vintage breakdown shows 98% of Fannie's current portfolio consists of 2009-or-later originations, of which only 0.53% are seriously delinquent — the remaining tail of pre-2009 crisis-era loans (2% of portfolio) carries elevated rates but is shrinking. The single-family credit story, for now, is one of slow drift rather than deterioration.
The multi-family picture is different and worth watching — McBride notes delinquency rates there are high and increasing, a signal consistent with the overbuilding in Sun Belt apartment markets and softening rents that have pressured landlord cash flows over the past 18 months. (The full multi-family data is behind his paywall, but the directional flag matters.)
RENTER AFFORDABILITY: SLOWER GROWTH IS NOT RELIEF
Olsen's Zillow analysis puts the sharpest point on the affordability story. 21.4 million renter households were cost-burdened in 2024 — defined as spending more than 30% of income on rent — up from 20.9 million in 2023. That's 47.6% of all US renter households. The severely burdened cohort (>50% of income on rent) climbed to 10.9 million from 10.5 million.
The key analytical move Olsen makes: slower rent growth doesn't reduce burden, because households pay the level of rent, not the rate of change. Rents are still rising, just less fast — and relative to incomes, they remain stretched. The composition effect amplifies this in expensive metros: expensive cities also tend to have more renters as a share of households, so a larger population is exposed to the pressure in the first place.
The policy gap is stark. Only 2.79 million Housing Choice Vouchers were in circulation in 2024, against 21.4 million cost-burdened households — a shortfall of roughly 18.6 million, which grew by 400,000 from the prior year. Even that understates it: voucher holders face significant barriers finding landlords who will accept them.
STRUCTURAL FRAME: ERDMANN'S 20TH VS. 21ST CENTURY THESIS
Erdmann is developing a presentation-derived framework worth flagging for context. His core argument: 20th century housing cycles were driven by impatience — demand temporarily outpacing local supply, prices rising, supply catching up, prices normalizing. The corrective mechanism worked because supply was allowed to respond.
His "Closed Access city" thesis holds that starting around 2000, a handful of high-demand metros (New York, LA, San Francisco, and their peer group) permanently broke that corrective mechanism through land use restrictions — demand permanently outpaced supply, and the cycle never closed. This structural framing matters for interpreting today's data: regional divergence isn't just cyclical noise. The Middle Atlantic's +4.2% YoY gain versus the Mountain West's -0.7% may reflect this enduring constraint structure as much as near-term demand shifts. (Parts 2 and 3 of this series are subscriber-only, but Part 1 lays the analytical scaffolding.)
Closing synthesis: The February price data confirms a broadening softening — not a crash, but a regime of negative real returns that has now spread from the Sun Belt to Pacific and Mountain markets. Credit quality in single-family is holding, which limits systemic risk, but the renter affordability crisis is deepening independent of rate moves. The policy gap between need and voucher availability is growing. Erdmann's structural lens is the right one for reading regional divergence: the markets still posting gains are largely the supply-constrained coastal metros, while the markets that built are the ones now correcting.
TL;DR - Prices going negative in real terms: Case-Shiller national index up just 0.7% YoY in February, with CPI running 1.7pp above appreciation for the 9th straight month and more than half of major metros now posting outright YoY declines. - Single-family credit is stable but watch multi-family: Fannie and Freddie SF serious delinquency rates held near 0.58–0.60% in March, but McBride flags multi-family delinquencies as high and rising. - Renter burden keeps rising even as rent growth cools: 21.4 million cost-burdened renter households in 2024, up 500K year-over-year — Olsen's key point is that households pay the level of rent, not the growth rate, and levels remain elevated. - Regional divergence is structural, not just cyclical: Erdmann's framework ties the persistence of gains in supply-constrained metros (and corrections in markets that built) to 21st century zoning constraints, not just rate sensitivity.
Compiled from 3 sources · 4 items
- Bill McBride (2)
- Kevin Erdmann (1)
- Skylar Olsen (1)