As the single largest expense for most consumers, housing costs play a major role in how people make ends meet. A home is often both a homeowner’s primary wealth building opportunity and their largest source of debt. And with over $34 trillion in home equity and nearly $17 trillion owed on residential mortgages in 2025, housing sector stability matters to the health of the overall US economy.
Housing cost and availability also significantly affect the labor force. If workers can’t afford good-quality homes in economically dynamic regions, businesses may struggle to fill needed roles.
Housing’s economic influence and importance often come into sharp focus during shocks. The subprime mortgage crisis of the 2000s and resulting Great Recession, for instance, devastated household balance sheets and pushed unemployment levels to a multi-decade high. More recently, following the pandemic, rising housing costs contributed to above-target inflation.
“Rapid price and rent increases over the past five years have created enormous pressure on household budgets and placed homeownership beyond reach for many Americans. This affordability crisis constrains labor mobility, limits the ability of businesses to hire, affects where businesses choose to expand operations, and reduces the wealth-building potential that homeownership has historically provided to many American families.”
Susan M. Collins, president and CEO, Federal Reserve Bank of Boston
“Rapid price and rent increases over the past five years have created enormous pressure on household budgets and placed homeownership beyond reach for many Americans,” said Federal Reserve Bank of Boston President Susan M. Collins at a June 2025 event. “This affordability crisis constrains labor mobility, limits the ability of businesses to hire, affects where businesses choose to expand operations, and reduces the wealth-building potential that homeownership has historically provided to many American families.”
These significant economic impacts make housing a key consideration for the Federal Reserve in advancing its dual mandate of price stability and maximum employment. In regular conversations and work with local stakeholders around the country, Fed community development staff hear a growing urgency related to housing affordability.
Community development initiatives underway at the Fed illuminate the housing affordability challenges and strategies at play in neighborhoods across the country. This work complements and is often interwoven with the Fed’s economic research and bank supervisory functions, supporting a robust understanding of households’ economic experiences.
This work also informs Fed leadership and national policymakers on critical housing issues and trends. The regional structure of the Federal Reserve System enables a deep understanding of local conditions, supporting communities’ efforts to pursue informed, data-supported housing strategies.
To track and understand key US housing challenges, the Fed’s work helps answer three overarching questions. What is necessary to ensure a robust range of housing is available to consumers? What impacts the affordability and stability of rental housing? And what affects people’s ability to buy a home and hold onto it over time?
Below, learn more about why these housing questions matter to the Fed and the economy and explore some examples of how Fed staff around the country are researching, working with communities, and bringing stakeholders together around these issues.
Expanding the range of housing available
Communities that build more homes and offer a wider range of housing types in response to growing demand achieve greater affordability than those with less supply. Even building higher-priced new units can help keep current prices down for everyone by opening up new opportunities for low- and moderate-income households through a succession of residential moves.
Fed staff monitor housing supply investments and convene practitioners and policymakers to discuss appropriate approaches to local housing construction.
- The Minneapolis Fed is monitoring the impacts of the Minneapolis 2040 plan, which expanded development options on land formerly restricted to only single-family detached homes.
- The Chicago Fed hosted a webinar that highlighted examples of communities using data to rethink their zoning policies to unlock housing supply.
- The Philadelphia Fed convened an event series focused on identifying and addressing challenges workers face affording housing near quality jobs.
- The New York Fed hosted gatherings on the development of affordable housing on land owned by nonprofits, including hospitals and faith-based organizations.
- The Chicago Fed holds an ongoing Community Development Investment Roundtable focused on identifying and addressing barriers to affordable housing development in Detroit.
Manufacturing affordable homeownership, one unit at a time
Manufactured housing offers a uniquely affordable homeownership onramp at a time when aspiring buyers can’t afford pricier site-built homes. Even with perception and financing challenges to surmount, some are finding creative ways to extend this homeownership option to more buyers.
Fed staff also consider how investment in a wider array of housing types can help meet changing demand and expand the availability of lower-cost units.
- The Boston Fed held a gathering exploring the role that accessory dwelling units (ADUs) could play in addressing housing supply in New England. Also known as “granny flats,” ADUs can separately accommodate additional households on a single-family lot.
- The San Francisco Fed outlined types of homeownership opportunities beyond traditional single-family homes, including condominiums, cooperatives, community land trusts, and ADUs.
Financing a broad array of housing units
Financing affordable housing can be particularly complex. Apart from public subsidies, affordable housing can require capital from a range of investors, including banks and Community Development Financial Institutions (CDFIs), institutional or impact investors, and nonprofits.
Could greater secondary market access help CDFIs meet growing demand?
Demand is up among underserved borrowers for community development financial institutions’ loans. Some industry experts are exploring whether these mission-driven lenders might leverage broader secondary market opportunities to increase available lending capital.
Fed staff have helped document this complexity and shared examples of strategies to address it for different kinds of developments, from large-scale multifamily affordable housing to smaller format homes such as ADUs.
- The Kansas City Fed conducted a case study of a project successfully combining different funding sources to create mixed-use multifamily rental housing.
- The Richmond Fed compiled a roundup of ways rural communities are addressing construction costs and creatively layering resources to increase housing supply.
- The Chicago Fed convened lenders and local leaders to describe how a set of rural communities in Iowa identified funding to increase housing supply.
- The Dallas Fed has engaged with local philanthropic organizations to explore how impact investing models could be leveraged to support affordable housing development.
- The New York Fed undertook research and convened gatherings that considered opportunities to bring new funding streams into the production of affordable housing, including private institutional capital.
- The San Francisco Fed and Minneapolis Fed have hosted events focused on strategies to increase affordable housing on tribal lands.
Fed staff have also explored avenues for producing more affordable housing without the use of public subsidy.
- The San Francisco Fed, after identifying opportunities to diversify the owner-occupied housing stock beyond single-family homes, held gatherings to review innovative financing approaches for these housing types.
Preserving existing housing stock
Existing homes that remain both affordable and in good condition are vital to the overall supply of affordable housing. Yet risks ranging from natural disasters to expiring affordability restrictions can threaten this important housing stock. Fed staff research these risks and engage with communities to deepen understanding and highlight mitigation strategies.
Lower-income neighborhoods face greater flood risk, tougher recovery
Increasingly frequent and severe flooding can have devastating impacts on communities. The Federal Reserve Banks of New York, Cleveland, and Philadelphia examine flood risk in their regions and the implications for low-and-moderate income communities.
Natural hazards both acutely and indirectly impact low-to-moderate income (LMI) households’ residential security by heightening risks of displacement, asset loss, and unaffordable increases in insurance premiums. Recent work helps clarify communities’ exposure to disaster risks and inform proactive responses.
- The San Franscisco Fed quantified communities’ vulnerability to wildfire smoke.
- The New York Fed explored flooding risks in LMI neighborhoods.
- The Philadelphia Fed identified at-risk communities that may not be reflected in existing flood maps.
- The Atlanta Fed and the New York Fed examined households’ resiliency in the face of environmental risks.
- The Cleveland Fed conducted a case study of recovery efforts following the Eastern Kentucky floods to shed light on strengths and gaps in existing resources.
Where housing preservation challenges are economic rather than environmental, Fed researchers leverage public datasets and engage housing providers to shed light on operational costs and issues.
- From conversations with regional multifamily property owners, the Minneapolis Fed identified maintenance, insurance, and financing costs as critical financial pressures for both private and nonprofit housing providers.
- Ongoing work at the Chicago Fed helps housing stakeholders identify subsidized units nearing the end of their affordability requirements, assess their risk of exit from the affordable stock, and plan accordingly.
LIHTC affordability requirement expirations and their implications on the supply of guaranteed affordable housing
Research conducted by the Chicago Fed explains how the exit of guaranteed affordable rental units from the Low-Income Housing Tax Credit program will affect the long-term supply of affordable housing.
Enabling rental affordability and stability
Over the past decade, increasing rents have emerged as a significant driver of inflation. Rising rents also place a major burden on less-affluent households and can impede residential and economic mobility.
The Federal Reserve Board of Governors’ Survey of Household Economics and Decisionmaking (SHED) provides one of the richest nationally representative datasets on renter households’ financial and residential security. The survey provides unique insights on renters’ experiences and housing outcomes, including reasons for renting, neighborhood satisfaction, and ability to keep up with rent payments.
Fed research and engagement initiatives shed light on rental affordability and stability challenges. Regional collaborations have also yielded innovative solutions.
- The Atlanta Fed, Philadelphia Fed, Minneapolis Fed, and Kansas City Fed maintain dashboards and regional profiles elevating and clarifying local rental market dynamics.
- The rental housing track of the 2024 Reinventing Our Communities (ROC) Cohort Program brought together peer groups from across the country to learn from one another and receive rental housing-focused technical assistance.
- Emphasizing the connection between housing opportunity and employment, the Chicago Fed and St. Louis Fed collaborated on a webinar series highlighting local workforce housing strategies.
- The New York Fed and Philadelphia Fed each convened regional housing practitioners, highlighting opportunities for innovative workforce housing policy reforms, programs, and partnerships.
- The Dallas Fed brought together community stakeholders and developers to identify strategies for advancing supportive housing, which offers deep affordability but faces financing challenges and operational concerns.
- The Chicago Fed hosted a series of convenings in Detroit to identify ways to support low-income renters facing eviction and to help stabilize the finances of affordable housing providers.
Affording homeownership now is hard for many. These approaches may help.
In this explainer, learn more about some of the factors recently complicating affordable US homeownership and discover how some communities and organizations are helping to extend affordable homeownership to more families.
Understanding homeownership trends
Across the country, roughly two out of every three housing units are owner-occupied. To better understand the needs of these households and changes in the homeownership market, Fed researchers actively monitor and research homebuying and ownership trends.
- The San Francisco Fed explored how homebuying patterns changed during the COVID-19 era, finding that homebuying peaked among many types of buyers during the pandemic and declined sharply in following years.
- The Cleveland Fed analyzed home lending trends in seven large counties in Kentucky, Ohio, and Pennsylvania, finding that rising interest rates in 2022 led to a decline in low- and moderate-income homebuyers and a decrease in loan originations for refinancing.
- The Minneapolis Fed found that homeownership among the nation’s lowest-income households climbed to a near all-time high by 2023, with 47.1 percent of households in the bottom fifth of the income distribution owning their homes.
Over the past two decades, investors make up an expanding share of single-family homebuyers. Some stakeholders have expressed concern that investors, particularly those backed by private equity, are outbidding low- and middle-income homebuyers for lower-priced houses. Fed research has confirmed across multiple urban areas that neighborhoods with the highest shares of investor- or corporate-owned single-family homes are more likely to be in lower-income neighborhoods.
- The Cleveland Fed, Minneapolis Fed, Philadelphia Fed, and Richmond Fed offer data tools and analyses examining these trends in investor home purchasing and ownership in their regions.
Investing from within: Native CDFIs help their people find home
Native CDFIs use creative approaches to help their neighbors navigate homeownership in Indian Country, making notable progress even at their smaller scale. But they can’t do it alone. Learn how other lenders can join NCDFIs to connect Native homebuyers with the loans they seek.
Examining lending access to support homeownership
In 2025, only about one in five primary residences was purchased with cash. Most homebuyers need a loan—whether from a bank, a credit union, or a CDFI—to finance their purchase. Mortgage rates are a key pathway through which monetary policy influences household finances.
Fed researchers use their access to Home Mortgage Disclosure Act data and other sources to understand who can access home mortgages and at what prices.
- The Philadelphia Fed and Cleveland Fed’s Home Mortgage Explorer charts mortgage applications by loan and borrower characteristics at the national, state, metro, and county levels.
- The Minneapolis Fed has analyzed differences in conventional mortgage denial rates, finding that after controlling for borrower characteristics, Black, Asian, and Latino applicants are more likely face denial of their mortgage applications than white applicants.
- Through its Center for Indian Country Development, the Minneapolis Fed discovered that Native American borrowers, whether living on or off federally recognized American Indian reservations, pay considerably higher interest rates for home loans than white borrowers.
- Dallas Fed researchers found that homeowners in lower-income ZIP codes are less likely than those in higher-income ZIP codes to refinance to obtain more favorable rates, with implications for both household wealth building and our understanding of the impacts of monetary policy.
- Chicago Fed researchers measured refinance gaps across Chicago neighborhoods when mortgage interest rates fell to a historical low to better understand both household wealth building and the impacts of monetary policy.
- Homebuyers unable to access traditional mortgages sometimes turn to higher-risk alternative financing mechanisms such as contracts for deed. To better understand and shed light on the prevalence and distribution of these arrangements, the Atlanta, Chicago, and Cleveland Reserve Banks identified and analyzed patterns in contract for deed agreements.
Built to fail? Contracts for deeds often sell a homeownership illusion
Contract for deed homeownership agreements can appeal to lower-priced home buyers who believe they are unable to qualify for or secure a mortgage. But CFDs often lack consumer protections and can cost unsuspecting buyers their home and their investment in it.
Assessing and advancing stability and wealth building
Even among lower-income buyers able to purchase a home, long-term obstacles remain to homeownership stability and wealth-building. Fed work on these topics has informed interventions to expand consumer protections, helping ensure homeowners and their heirs can fully realize the benefits of homeownership.
- Deferred maintenance and unmet repair needs affect vulnerable homeowners in a wide range of communities. Philadelphia Fed research found that a concentration of lower-income homeowners in older, deteriorated housing stock can struggle to age in place and maintain the value of their homes.
- The St Louis Fed convened practitioners and policymakers to discuss barriers and best practices for building regional home repair service networks for lower-income homeowners.
For some households, legal and regulatory issues raise barriers to building and sustaining family wealth through homeownership. Building both novel research datasets and relationships with stakeholders to understand who is affected and where, Fed researchers are shedding light on these unconventional situations.
- The Philadelphia Fed documented and convened stakeholders around issues affecting homeowners in land-lease manufactured housing communities, an unusual housing arrangement in which homeowners own their unit but not the underlying land.
- In many rural areas, complex heirs’ property situations inhibit access to homeowner resources and expose family properties to the threat of forced sale. Research and engagement by the Atlanta Fed, Dallas Fed, and Richmond Fed has informed efforts to stabilize these households and mitigate their risk of asset loss.
Losing the family home, with ripples down the bloodline
Heirs’ property situations can strain family relationships and put billions of dollars of wealth at stake. Read one woman’s story and learn how she’s now working to help others preserve their family ties, homes, and financial stability.
Understanding and emphasizing housing’s vital role in the economy
The research, convening, and engagement efforts featured here are just some of the ways Fed community development work examines the economic impact of housing challenges and strategies to mitigate them. Efforts related to this key sector of the nation’s economy have developed regional evidence, drawn on practitioner insights, and deepened community connections to help the Fed serve the public, advancing its dual mandate of price stability and maximum employment.
This work shows the importance of housing affordability and availability to economic mobility, stable employment, and steady household finances. It demonstrates that expanding and diversifying the housing supply in turn helps businesses and local economies grow. And it emphasizes housing’s vital role in supporting a strong and thriving national economy.
