Thought Leadership

The U.S. housing market is no longer one market—it’s a bifurcated market, where only well-capitalized buyers can participate. Rising prices, elevated mortgage rates, and the disappearance of entry-level homes are pushing first-time and lower-income buyers to the sidelines. The result is a fragmented market defined by widening gaps in access, affordability, and opportunity.

As housing affordability remains strained, policymakers are turning to two high-profile ideas: limiting large institutional investors from buying single-family homes and using government-backed purchases of mortgage-backed securities to lower mortgage rates. This article examines whether these policies can meaningfully improve affordability or whether their impact will be limited without addressing the deeper housing supply shortage.

U.S. home prices have surged 47% since 2019, while household incomes rose only 22%, leaving millions priced out of homeownership. Even as mortgage rates ease near 6.3%, affordability remains at record lows, with coastal and Sun Belt metros hardest hit and only a few Midwest cities still within reach for median-income buyers.

Over the last several years, the U.S. housing market has seen a sharp decline in buyer activity. In May from 2016 to 2022 (except 2020), over five million homes were sold at an annualized rate. In contrast, May 2025 saw just four million sales (NAR). This drop is not limited to first-time buyers—repeat buyers are also pulling back from the market. So, where have all the buyers gone?