US housing market faces affordability and delinquency challenges

The United States housing market is facing increasing affordability challenges and shifting investment trends. According to the Mortgage Bankers Association, the overall mortgage delinquency rate was 4.37% in the second quarter of 2026. While overall delinquencies fell slightly from the previous quarter, the rate of serious delinquencies—defined as being at least 90 days behind or in foreclosure—rose for the fourth consecutive quarter, reaching 2.06%. This trend is particularly evident in FHA mortgages, which are frequently utilized by first-time and lower-income buyers.

High mortgage rates, with the 30-year fixed average exceeding 7%, have created a divide between existing homeowners with low fixed rates and new buyers facing significantly higher borrowing costs. This environment has led some individuals, particularly younger Americans, to favor the stock market over homeownership. Data from December 2015 through December 2025 shows that while the Case-Shiller Index of home prices increased 87%, the S&P 500 grew by 235% during the same period.