A 6.95% Mortgage Rate Meets a Frozen Housing Supply

The average US 30-year mortgage rate rose to 6.95% on September 17, the highest since President Donald Trump returned to office. That print landed a day after the Federal Reserve’s first rate increase in three years, and weeks before the November midterms.

Buyers will feel the extra points on the note. The deeper problem is that homes are still not coming onto the market fast enough for paychecks that, even at a new record, sit below the income now required in much of the country.

The 30-Year Rate Climbs to 6.95%

Freddie Mac said the 30-year fixed-rate mortgage averaged 6.95% as of September 17, up from 6.76% the prior week and 6.26% a year earlier. The 15-year rate averaged 6.26%, up from 6.09% and 5.41% a year ago. The survey covers conventional purchase loans for borrowers who put 20% down and have strong credit, so it is the clean rate, not the worse one many first-time buyers actually pay.

On a $400,000 loan, that 6.95% rate works out to about $2,648 a month in principal and interest, $183 more than the same loan at last September’s 6.26%, or $2,196 over a year. Mortgage rates follow the 10-year Treasury more than the overnight funds rate, and the 10-year has been hovering around 5%, near its highest since 2007.

On September 16 the Federal Open Market Committee voted 12-0 to raise the federal funds rate by a quarter point to a range of 3.75% to 4%. It was the first hike under Chairman Kevin Warsh, who took office in late May. The Board also lifted the rate paid on reserves to 3.90% and the primary credit rate to 4.0%, both effective September 17.

Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.

Federal Open Market Committee, statement, September 16, 2026

The funds rate does not set the 30-year note. It does tell markets that officials are done hoping inflation fades on its own, which is why the long end of the bond market, and then mortgage rates, moved first.

THE WEEK THE NUMBERS STACKED

1. September 15, 2026: The Census Bureau reports that real median household income in 2025 rose 2.6% to $87,460, a record in data back to 1967.
2. September 16, 2026: The Fed raises its target range by a quarter point to 3.75% to 4% in a 12-0 vote, the first increase in three years.
3. September 17, 2026: Freddie Mac puts the 30-year average at 6.95%, up 0.19 point in a week and the highest since January 2025.

Taken together, those three prints describe a market in which incomes finally cleared their old peak just as borrowing costs headed the other way.

Cheap Mortgages Keep Existing Owners in Place

High rates were supposed to cool prices by thinning the buyer pool. They also froze the other side of the market. Owners who borrowed in the early 2020s still sit on notes far below today’s 6.95%, and selling means giving that payment up. Harvard’s Joint Center for Housing Studies, drawing on the National Mortgage Database, found that as of late 2025 half of outstanding mortgages carried a rate below 4%.

A 3% note is a subsidy that cannot be copied at today’s prices. It severs the monthly cost of the house a family already owns from local wages, so the rational move is to stay. The American Community Survey put residential mobility at a record-low 11.2% in 2024, with homeowner moves falling to 5.1% from 5.5% a year earlier. Existing-home sales have been stuck near three-decade lows even as listings have risen from their 2022 trough.

THE SUPPLY FREEZE

• Rate lock-in: Owners with notes under 4% lose money the day they trade into a 6.95% loan, so they do not list.
• Labor on sites: Builders say immigration enforcement is keeping legal workers off jobs, which slows the new homes that would replace missing listings.
• Lots and materials: Forty-two percent of builders rated current lot supply as poor, and higher lumber, steel, gas, and diesel costs make the units that do get built more expensive.

Listings have improved from the worst of the shortage. In March, 1.39 million existing homes were for sale, up 5% from a year earlier, yet that stock was still 17% below the 1.67 million available in March 2019. The thaw is real and still too small to bring prices back in line with pay.

The housing sector is not a good-news story from any dimension. We had a period of low inventory on both the owner-occupied and rental side, and now we have the problem of high prices and high financing costs.

Douglas Holtz-Eakin, president, American Action Forum

Renters are not getting a clean exit either. The homeowner vacancy rate was 1.1% and the renter vacancy rate 7.3% in the Harvard tally, both still below long-run averages, while cost burdens for renters hit another record.

A 32 Reading and Empty Job Sites

If existing owners will not sell, new construction has to do the work. It is not. The National Association of Home Builders said builder confidence fell three points to 32 in September on the NAHB/Wells Fargo Housing Market Index, where any reading below 50 means more builders see conditions as poor than good. Chief economist Robert Dietz said that was the lowest level since September 2025.

BUILDER READINGS IN SEPTEMBER

Single-family starts fell 7% in 2025, to 940,600, according to the Harvard report’s Census tabulations. Builders have been cutting prices, buying down rates, and shifting toward smaller homes and townhouses, and they still cannot clear the market at a price a typical household can finance.

Buyer traffic has weakened across much of the country, largely because of rising mortgage rates. Builders also continue to face higher material costs, rising gas and diesel prices and persistent labor shortages. In some markets, builders report that increased immigration enforcement is discouraging legal workers from reporting to job sites.

Bill Owens, chairman, National Association of Home Builders

Dietz added that 42% of builders rated current lot availability as poor and 38% as fair. The Census Bureau projects net international migration of 321,000 people in 2026, after it already halved in 2025, which pulls both housing demand and the foreign-born share of construction crews at the same time. New homes that do get finished are not cheap. The median new single-family price was about $417,400 in 2025, above what a median-income household can carry at the usual 30% of income test.

What a Median Paycheck Can No Longer Buy

The Census Bureau’s 2025 income report, issued September 15, said real median household income was $87,460, up 2.6% from $85,210 in 2024 and the highest on record back to 1967. That is a genuine raise. It is also not enough to clear the mortgage screen now used in much of the country.

The National Association of Realtors finds that 49% of the US metro areas it tracks now require a household income of $100,000 to qualify for a mortgage on a median-priced home with 10% down, up from 6% of those metros in 2019. The national median of $87,460 sits under that $100,000 line. So does the $94,880 median for householders age 25 to 34, the band that supplies most first-time buyers.

PAYCHECKS VERSUS THE MORTGAGE SCREEN

Two-earner married couples still clear the line in a lot of markets. Single buyers and younger households do not. The 2019-to-now jump, from 6% of metros to 49%, is the map of how a 6.95% rate and years of thin listings pushed ordinary cities into a club that used to be coastal.

HUD’s February Claim Meets a 6.95% September

Trump promised on his first day back to lower housing costs. For the 2026 State of the Union, HUD’s public accomplishments list put Making the Housing Market Accessible Again in the first slot. The February page said a Day One executive order was already at work, that the income needed to buy a home was down 4%, that mortgage affordability was at a four-year high, and that “mortgage rates continue to drop.”

Seven months later the 30-year is at 6.95%, builder confidence is at 32, and 49% of tracked metros require $100,000. HUD Secretary Scott Turner has kept issuing affordability actions, including a September 1 rewrite of Fair Housing design-and-construction guidance that he said had piled repair costs onto owners. Those steps do not move the 10-year yield, and they do not put a legal carpenter back on a site where crews have stopped showing up.

The political timing is awkward because the people who already own, and who hold those sub-4% loans, are insulated from the 6.95% print. The people who do not own are not. That split, more than the weekly survey, is what the November map will test in cities that were not supposed to be $100,000 markets.

Swing-State Employers Cannot House Their Staff

The NAR $100,000 club now includes Columbus, Ohio; Dallas-Fort Worth-Arlington, Texas; and Lancaster, Pennsylvania, all of them regular stopovers on a midterm calendar. In Portland, Maine, another battleground, Andrew Volk, who owns the Hunt & Alpine bar, said staff cannot find a place to live, and that this has made it harder to keep workers.

SWING METROS NOW ABOVE THE $100,000 LINE

• Columbus, Ohio: A Midwest capital that used to sell itself as cheaper than the coasts now sits in the NAR group that needs $100,000 for a median-priced home with 10% down.
• Dallas-Fort Worth-Arlington, Texas: Years of in-migration met thin existing inventory and higher rates, and the qualifying-income line moved with them.
• Lancaster, Pennsylvania: A smaller metro in a presidential battleground, now in the same $100,000 club as much larger Sun Belt markets.
• Portland, Maine: Employers describe housing, not wages alone, as the reason they lose people after they hire them.

“Whenever one of our staff members is looking for housing, it can be very tough to find something,” Volk said. Asked if that had made it harder to hang on to workers, he said, “One thousand percent.”

A bar that cannot house bartenders is a small version of the same freeze. Owners stay put because their old loan is cheaper than any new one. Builders slow down because crews, lots, and materials all cost more. The Fed can lift overnight rates in a 12-0 vote, and HUD can keep accessibility at the top of a February list, and the 10-year can still sit near 5%. Until those cheap existing notes reprice or new homes actually get built, the 6.95% survey is a symptom. The inventory is the disease, and it will still be there after the ballots are counted.