Zillow is committed to bringing clarity and insight to the housing landscape. In our recent “State of the Housing Market” webinar, Zillow Senior Economist Orphe Divounguy, Zillow Senior Government Relations Manager David Pope and Housing Finance Strategies Managing Director Allen Jones analyzed the present shortage of 4.7 million homes, rising affordability challenges and shifting industry practices. These key trends, challenges and opportunities offer a strategic road map to a fairer, more accessible market for policymakers, industry leaders and housing advocates.
Affordability remains the defining challenge
Housing costs continue to outpace incomes, keeping many first-time buyers and renters on the sidelines. In 2022, rent growth surged 16% year over year — a pace far beyond income gains — leaving households stretched thin. Delinquency rates on credit cards, auto loans and student loans are climbing, especially for the younger households that make up the next generation of buyers.
Rising insurance premiums in climate-vulnerable states like Florida, Louisiana and California compound affordability pressures and reshape where families can realistically live. Mortgage rates also remain elevated, holding in the mid-6% range, and are likely to stay there through the end of the year. Divounguy noted that sharp declines in rates tend to happen only during economic crises, making a return to the 3%–4% era unlikely. Policymakers must expand supply, lower barriers to entry and integrate resilience into housing policy to ensure long-term stability.
Policy reform can unlock housing supply
From outdated zoning and permitting rules to the complexity of loan origination, regulatory hurdles add costs and delays to the market. Both federal and local reforms — including streamlined lending rules, smarter disclosures and contemporized zoning — are critical to reducing friction and making the system more equitable.
Zillow’s three-point policy plan calls for modernizing disclosure laws, enabling broader adoption of digital closings and using AI to responsibly increase efficiency in mortgage lending. These reforms could reduce origination costs that currently average $12,000–$15,000 per loan.
Reactivating builders is essential
Zillow data shows an average of 5.5 engaged shoppers per listing, yet home builders are pulling back as falling prices, higher costs and regulatory constraints weigh on the market. Permitting activity has declined nearly 50% from last year, and single-family housing starts have stalled. Builders are cautious in an environment of falling prices, which threatens to worsen the nationwide shortage of nearly 5 million homes. Policymakers must lower barriers to construction and incentivize new supply to meet long-term demand.
Economic uncertainty is slowing mobility
Labor market anxiety and slower job growth are causing households to delay moves and major housing decisions. At the same time, national housing inventory has risen 18% year over year, shifting some markets toward buyers. In July, 27% of listings nationwide cut prices — the highest share ever recorded on Zillow.
But this easing isn’t uniform: Sun Belt metros like Austin, Houston and Phoenix see modest price declines thanks to new supply on the market. The Northeast and Midwest remain tight, with rising prices and older housing stock pushing affordability out of reach. Even in more balanced markets like Washington, D.C., affordability challenges persist, creating what Divounguy called “a market for the haves.”
Charting the path forward
The discussion made clear that today’s housing challenges — from affordability pressures to builder pullback — require coordinated and intersecting solutions. With the right policy reforms and industry leadership, we can turn these challenges into opportunities for a more resilient and equitable housing market.
Dive deeper into these topics and more by watching the full “State of the Housing Market” webinar and equip yourself with the insights you need to navigate today’s housing dynamics with confidence and clarity.