Americans are now spending more than 35% of their median income on monthly principal and interest payments for that newly purchased median-priced home. Historically, Americans spent closer to 25% of median income on payments. Instead, mortgage rates tend to track the yield on the 10-year US Treasury. As investors anticipate the Fed's rate hikes, they often sell government bonds, which sends the yield higher and, with it, mortgage rates. In May, the Biden administration announced a Housing Supply Action Plan to close the affordability gap and ease housing costs.

Source: CNN September 23, 2022 05:00 UTC