The American dream of homeownership takes work.

At the American Property Owner’s Alliance, we focus on the issues that matter most to homeowners, from promoting housing access to protecting property rights and advocating for the role homeownership plays in building strong communities. We work with elected officials, financial leaders and community stakeholders across the country to help promote and protect the American dream of homeownership.

June is National Homeownership Month and a perfect opportunity to reflect on the near past and look to the future as we consider all things about the U.S. housing market.

Crisis and Resilience: The U.S. housing market over the past 20 years

The 2008–2009 financial crisis, rooted in the collapse of the subprime mortgage market, exposed systematic flaws leading to over 3 million foreclosures, a severe credit crunch, and plummeting home values. Congress met the moment with the passage of laws designed to promote better mortgage underwriting and protect consumers.

In the decade that followed, the U.S. housing market recovered aided by the Worker, Homeownership and Business Assistance Act of 2009 which provided an $8,000 tax credit to first-time homebuyers and a $6,500 credit for homebuyers who lived in their current homes at least five years, as well as the Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP) designed to help people avoid foreclosure and refinance underwater mortgages.

By the mid-2010s, housing values in many regions had returned to – or exceeded – pre-crisis levels. Tighter lending regulations, low interest rates, and renewed demand helped stabilize prices. New construction also picked up, though inventory remained constrained in some high-demand areas across the country.

Then came COVID-19 and 2020 saw a housing market jolted by lockdowns and job losses. Again, Congress responded swiftly with stimulus measures, including the CARES Act (2020), which introduced mortgage forbearance protections and eviction moratoriums.

Once again, the U.S housing market rebounded with a surprising boom emerging by mid-2020.

Historically low interest rates and remote work trends sparked demand, pushing home prices to record highs – with some markets seeing double-digit annual increases through 2022. But this rapid growth strained affordability and by 2022, policymakers faced a new challenge: rising inflation. The Fed raised interest rates to tame inflation, but this had a cooling effect on home sales in many markets.

Some call the U.S. housing market cyclical. Others call it a rollercoaster. But however you see the housing market, each recovery and resurgence has been shaped by new legislation, stabilizing economic actions and the willpower of individuals and families who remain committed to the American dream of homeownership.

Here we go again?

One word to describe the U.S. economy over the past few months: volatile.

From the impact of federal workforce changes and spending cuts to persistent questions about interest rates and the impact tariffs will have on industries and individuals, the U.S. economy seems to face a new set of questions and challenges each week.

All this change and instability is resulting in quantifiable economic effects with tariffs contributing to a 0.3% contraction in GDP during Q1 2025 and a stock market erasing more than $3 trillion in market value over the past few months leading some major banks, like JPMorgan, to estimate a 60% chance of a recession within the year.

So, what might this mean for the U.S. housing market? According to the National Bureau of Economic Research (NBER), housing is a leading economic indicator, often declining before broader economic contraction. Simply put, when the U.S. economy approaches a recession, the housing market slows down.

But recent history tells us this won’t last forever. As the economy rebounds, housing is often one of the first sectors to recover. Driven by favorable interest rates, pent-up demand and improved consumer confidence, post-recession recoveries in housing contribute significantly to broader economic growth, especially through job creation in construction and related industries. Also, the certainty of 30-year, fixed-rate mortgages allows homeowners to predictably manage household budgets over the long-term and to realize a degree of stability – in uncertain times – helping individuals and families realize their American dream.

More homes needed

Today, the U.S. housing market continues to face a supply-demand imbalance. Despite a modest uptick in new construction, the nation faces a housing supply gap nearing 4 million units, a shortfall that has persisted since 2012.

Two factors in play: affordability and the “lock-in effect.” The National Association of Home Builders (NAHB) recently noted the cost for building a new home will potentially go up by $10,000 while new tariffs remain in place and NAHB also notes that nearly 60% of U.S. households cannot afford a $300,000 home. Additionally, many homeowners are choosing not to sell based on the “lock-in effect” – a reality today where approximately 83% of homeowners hold mortgages below 6% making many reluctant to sell and face higher interest rates.

Even with these economic and housing supply realities, states with affordable housing and overall lower costs of living plus strong job markets, like Arizona, Florida, Georgia, North Carolina, Tennessee and Texas, continue to attract residents.

For leaders in Washington, DC and communities across the country, strategic initiatives should continue to incentivize new construction, modernize zoning regulations, and support economic policies which encourage home buying and selling to help meet the housing markets supply needs.

More Money in Your Pocket

As we move deeper into 2025, focus turns to several pieces of tax legislation, the first being the permanent extension of the Tax Cuts and Jobs Act to help maintain lower individual tax rates and allow taxpayers to fully deduct state and local taxes (SALT) paid on their homes. The SALT deduction cap of $10,000 will sunset in 2025 but various proposals are on the table to increase the cap and eliminate the current marriage penalty.

Another potential benefit for taxpayers and homeowners would be capital gains reform. The Senate is considering the Capital Gains Inflation Relief Act of 2025 which would index certain assets for inflation when calculating capital gains while the House of Representatives is considering the More Homes on the Market Act which would increase capital gains tax exclusions for both single and joint filers. Both pieces of legislation potentially reduce tax burdens on long-term investments, enticing home sales while allowing Americans to keep more of the equity earned from their home.

To continue building and growing a vibrant U.S. housing market, legislative, economic and commonsense policy initiatives will need to work together. At the American Property Owner’s Alliance, we will continue to protect and promote the American Dream of homeownership for individuals and families across the country.

Sign up for The Alliance to stay informed on tax policy changes and the ways you can advocate for the restoration of incentives that property owners deserve.

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