During the pandemic, rock-bottom interest rates and a desire for more space drove a rapid and stunning rise in housing prices. While prices have moderated from their peak, they have not done so nearly enough to make up for the more than doubling of borrowing costs. President Biden says he has a solution, but like most forms of government interference, it would only make the problem worse.

The U.S. central bank held rates at their current range for the fourth straight time, signaling that the hiking cycle may be over setting up the stage for possible rate cuts in 2024. The possible reduction of rates, which, at their current two-decade highs, have helped push up borrowing costs across the economy, could be a boost for President Joe Biden as they could reduce the cost of buying a home and business investment.

A key measure of home-purchase applications slumped over the holidays despite a sharp drop in mortgage rates over the course of December.

The Mortgage Bankers Association's (MBA) index of mortgage applications fell 9.4% for the week ended Dec. 29, compared with two weeks earlier, according to new data published Wednesday. 

The data also showed that the average rate on the popular 30-year loan ended the year at 6.76%. While that is down from a peak of 8% in October, it is slightly higher than it was the previous week.

U.S. consumer confidence increased to a five-month high in December, with Americans growing more optimistic about current and future business conditions as well as the labor market, which could help to underpin the economy early next year.

The jump in confidence reported by the Conference Board on Wednesday occurred across all age groups and household income levels. Though consumers continued to worry about inflation, many were planning to buy motor vehicles, houses and major appliances like refrigerators and clothes dryers over the next six months.

Before she moved into the first shelter village of “tiny houses” in San Francisco, Sharon Sandelin — a 66-year-old who goes by “Mama T” — had been sleeping on the streets.

Now she lives in a 64-square-foot unit with heat, electricity, a twin bed, desk, and chair. There is a combination lock on the outside. The gated community where some 70 other people now live is clean and cheerful-looking, painted teal and sea-foam green. Residents are connected with supportive services like health care and served three meals daily.

Sales of new U.S. homes fell more than expected in October as a spike in mortgage rates weighed heavily on consumer demand. 

New single-family home purchases plummeted 5.6% to a seasonally adjusted annual rate of 679,000 units, the Commerce Department reported Monday. Economists surveyed by Refinitiv expected new home sales — which account for a small percentage of total sales — to come in at a rate of 723,000 units.

Sales remain up about 17.7% from the same time one year ago.

On Tuesday afternoon at a courthouse in Kansas City, Missouri, the collective nightmare of the real-estate industry became reality.

Fifty-three thousand real estate deals were canceled last month — the highest rate in nearly a year — as rising borrowing rates continue to scare off buyers, Redfin reported.

In September, 16.3% of home purchase agreements in the U.S. were canceled, according to the technology-powered real estate brokerage.

That marks the highest percentage of canceled contracts since October 2022, when borrowing rates surpassed 7% for the first time in two decades.

Sales of previously owned homes dropped 2.2% in July from June to a seasonally adjusted, annualized rate of 4.07 million units, according to the National Association of Realtors.

Sales were 16.6% lower compared with July of last year. Homes sold at the slowest July pace since 2010.

This count is for closings, so contracts were likely signed in May and June, when mortgage rates went from around 6.5% to well over 7%.

Sales fell month to month in all regions except the West, where they rose 2.7%. Sales dropped the most in the Northeast, down 5.9%.