It’s never been more challenging to find an affordable home to buy in the US.

High prices, a critical shortage of listings and mortgage rates that have more than doubled from the record lows of just a couple of years ago are forcing countless Americans to put their next moves and other major life decisions on hold.  

Gridlock is gripping the housing market in part because buyers and homeowners took advantage of historically low rates to purchase homes or refinance mortgages and lock in lower borrowing costs. More than nine of every 10 US homeowners with mortgages  – or 46.1 million people – have a rate below 6 per cent, according to a June report from Redfin Corp.

Those low rates have been an economic gift for many homeowners, a benefit that few want to give up. But for some owners, the situation has left them feeling stuck. A family stays in a house they’ve outgrown. A single mom is trapped in a costly fixer-upper. An empty-nester’s dream of downsizing in the neighbourhood she loves is fading. 

These struggles are playing out across the country at a time when property values have skyrocketed, borrowing costs have climbed and the inventory of existing homes is about half of what it was four years ago, before the pandemic buying frenzy.

Builders are rushing to step up production, but that alone can’t close the supply-and-demand gap. Largely absent is the one group that historically has kept the market moving: homeowners who are willing to sell.

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“I think people forget that the vast majority of sellers are also trying to buy at the same time,” said Danielle Hale, chief economist at Realtor.com. “When conditions are tough for buyers, it can hold back selling inventory as well.”

Without the normal turnover in the market, would-be buyers and sellers alike are stuck in a holding pattern. Mortgage rates are a primary reason for the gridlock. The market’s logjam is unlikely to significantly ease any time soon as mortgage rates face more upward pressure. The Federal Reserve on Wednesday hiked its benchmark rate to a 22-year high and scrapped its forecast for a recession.

Inventory challenges have also persisted for months. A measure of owners putting their properties up for sale tumbled 26 per cent in June from the same time last year, data from Realtor.com show. 

Many of the people staying put are homeowners who refinanced when 30-year borrowing costs hovered around 3 per cent. Moving and buying a new place now, while rates are near 7 per cent, would mean getting a more expensive loan. Even if a sale would net a big profit, letting go won’t make financial sense if what’s available to move into is priced out of reach. 

Among US homeowners who say they plan to sell in the next three years, 67 per cent would be willing to wait until mortgage rates drop, according to a recent survey by Credit Karma. Millennials were most likely to say they’d put their moves on hold. 

“Millennials, in particular, experienced mass layoffs and saw the housing bubble burst in 2008,” said Aniva Hinduja, general manager of home and mortgage at Credit Karma. “They’re being cautious because they understand the magnitude of making good and bad housing decisions. They’re punting those decisions and are making big sacrifices on their children, their relationships and their personal lives.” BLOOMBERG