Can Anything Kick-Start the U.S. Housing Market?

Summary

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WSJ What’s News: Can Anything Kick-Start the U.S. Housing Market?

Episode Summary – June 26, 2026

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Overview

This episode of WSJ’s “What’s News” explores the persistent U.S. housing market slowdown, focusing on the challenges that keep housing inventory low and prices high. Hosted by Luke Farkas, with key insights from WSJ Real Estate Editor Craig Carman, the episode answers listener questions about causes behind the shortage, the role of immigration, the own-versus-rent calculus, the focus on housing density, and—most crucially—whether anything except a drop in mortgage rates can truly rejuvenate U.S. home sales.

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Key Discussion Points

1. New York City’s Rent Freeze: Political & Economic Tensions

• [00:33–02:46] NYC’s Rent Guidelines Board approved a rent freeze for a million rent-regulated apartments, delivering on Mayor Mamdani’s campaign promise.
  • Some landlords and departing board member Christina Smith argued the process was politicized and didn’t account for rising owner costs:

    “Everything since then has been theater.” – Christina Smith (01:15)

  • Legal challenges to the rent freeze are expected since economic considerations are required by law.

2. California’s Billionaires Tax Proposal

• [02:46–03:34] A novel wealth tax will be on California’s November ballot:
  • 5% tax on residents with >$1B in net assets.
  • 90% revenue to healthcare, rest to education/food aid.
  • Criticized by Governor Gavin Newsom as potentially harmful for attracting investment.

    “Structurally, it’s very different from … taxation has worked in the U.S. historically.” – Laura Nelson (02:50)

  • Countermeasures by billionaires include ballot initiatives to block or restrict new taxes.

3. Listener Q&A with Craig Carman – Housing Market Deep Dive

a. Does Undocumented Immigration Worsen the Housing Shortage?

• [07:18–08:28]
  • Home loans to undocumented immigrants are legal, but very rare—~5,000 of 3.4 million in 2023.
  • Larger impact potentially in rentals: ~6 million households include undocumented immigrants (~10% of all rentals per Pew Center).
  • Construction labor markets rely on immigrant labor—shortages drive building costs up.

    “I don’t think you’ll see it in terms of prices in the vast majority of the country... labor costs are rising.” – Craig Carman (08:07)

b. Owner Decisions: Sell or Rent Out?

• [08:28–11:17]
  • Listener Ian from Rhode Island describes opting to rent out his property, not sell, due to high mortgage rates and lack of new supply:

    “Not much new inventory coming on the market here... the rental option just seems like a better long-term plan.” – Ian Kennedy (08:41)

  • Carman: Many homeowners have very low locked-in mortgage rates (sub-4%), making them reluctant to sell.
  • Congress proposes “More Homes on the Market Act” to double capital gains exemptions for sellers, incentivizing more listings:

    “Yes, you would be giving up your mortgage rate, but if your capital gains tax was considerably less, that would ease some of the financial burden…” – Carman (10:19)

c. Density vs Suburb Expansion

• [11:17–13:15]
  • Listeners ask why policy pushes high-density urban development over suburban expansion.
  • Suburban and exurban new builds remain constrained by NIMBYism and lot availability.

    “Even building a duplex… in an area zoned for single family housing gets a lot of pushback” – Carman (12:23)

  • Exurbs face similar issues, but have more available space and sometimes fewer restrictions.

d. Affordability Crisis for Young Americans

• [13:15–14:47]
  • Jason, a recent college grad from Omaha, explains that after rent, most in his peer group can’t save for a down payment:

    “I just don’t foresee people’s wages rising at the same level as the cost of living.” – Jason (13:46)

  • Carman: Mortgage rates remain a core barrier:

    “I think… mortgage rates are always a critical component to affordability… that could make housing a bit more affordable for more Americans.” – Carman (14:09)

  • Median U.S. home price now above $400,000; requires $80,000 down at 20%.

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Notable Quotes & Memorable Moments

• What Could Actually Lower Mortgage Rates?

  “The only thing that I could really think of at the moment that would seem certain to bring down mortgage rates would be a severe economic slowdown or recession.” – Craig Carman (00:53)

• On the “Locked-In” Effect:

  “[People] are very reluctant to sell and they may do stuff like the caller was talking about, which is maybe I’ll just rent it out rather than sell it because I have such a cheap mortgage.” – Craig Carman (10:00)

• On Political Realities in Housing:

  “There isn’t a monolith. Everyone’s trying to maximize their returns... How much can you truly shape what the housing supply looks like when it rests with so many individual decision-makers?” – Luke Farkas (09:06)

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Important Segment Timestamps

• [00:33] – Main headlines, NYC Rent Freeze story
• [02:46] – California wealth tax explained
• [06:37] – Transition to housing deep-dive/Q&A with Craig Carman
• [07:18] – Immigration and housing market impact
• [08:41] – Listener question: rent vs. sell
• [09:16] – Craig Carman explains the “locked-in” effect and supply
• [11:17] – Policy focus: density vs. suburbs
• [13:26] – Young Americans and affordability challenges
• [14:02] – Mortgage rates as the key constraint; closing thoughts

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Tone & Style

The discussion is direct, data-driven, and pragmatic, reflecting listeners’ real-world frustrations while providing analysis from both policy and economic perspectives. Craig Carman’s tone is analytical but empathetic, often emphasizing complexity and systemic constraints.

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Takeaway

The U.S. housing market remains gridlocked—low supply, stubborn prices, high mortgage rates, and little hope for sudden relief unless economic conditions turn sharply. Government incentives to unlock existing homes may help, but affordability remains the elephant in the room, especially for young and first-time buyers. As Craig Carman summarizes: mortgage rates are the linchpin, and barring economic upheaval, there’s little on the horizon to trigger a true reset.

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Transcript

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[Luke Farkas]

California's proposed billionaires tax heads to November's ballot Plus a New York City board approves Mayor Mamdani's rent freeze and Real Estate editor Craig Carman closes out our housing series by answering your questions like unless mortgage rates go down, can anything kick start home sales?

[Craig Carman]

The only thing that I could really think of at the moment that would seem certain to bring down mortgage rates would be a severe economic slowdown or recession.

[Luke Farkas]

It's Friday, June 26th. I'm Luke Farkas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. New York City's Rent Guidelines Board has delivered a win for Mayor Zoran Mamdani, approving a rent freeze for roughly a million of the city's rent regulated apartments, a signature promise of his campaign. One member of the board, Christina Smith, resigned ahead of yesterday's vote, saying its decision had been cemented after Mamdani appointed six members in February and that, quote, everything since then has been theater. The rent freeze was ultimately passed 7 to 1 over objections from some landlords who cited the rising cost of insurance and other expenses. Kenny Burgos leads the New York Apartment association and spoke out against the rent freeze on pix11 news. The mayor inherited his housing crisis, but now he's going to own it. He is now choosing to freeze the rent while expenses are increasing while his water board increases the rates to 6% while property tax have doubled over five years while insurance have skyrocketed. Mamdani called the vote a historic victory for tenants, describing it as the relief that working people deserve. The board's vote is likely to face legal challenges as it's legally required to consider economic conditions in its decision, including costs such as taxes, utilities, maintenance and more. A proposed billionaire tax in California is heading to November's ballot. That's after unsuccessful efforts by Governor Gavin Newsom to persuade a health care workers union behind the tax to withdraw it. Speaking to the Journal podcast earlier this year, reporter Laura Nelson explained what makes the proposed tax so unique.

[Laura Nelson]

Structurally, it's very different from the way that taxation has worked in the United States historically, which is that when something changes hands, then you pay taxes instead.

[Luke Farkas]

Laura explained that the one time 5% levy would apply to California residents with net assets of a billion dollars or more.

[Laura Nelson]

So that would mean tax collectors beginning something new, which is to take a look at the assets that people own and value them, and then impose a tax on the value of those assets. So that could include stocks, that could include artwork, that could include intellectual property rights, that could be voting rights in a company that you started or helped to start. And the tax would apply people who lived in California. As of January of this year, 90%

[Luke Farkas]

of revenue generated by the tax would be earmarked for health care and the remainder to education and food assistance. The measure is teeing up a fight among Democrats, with Newsom warning that it could deter investment that drives the state's economy, even as polls show that a majority of Democratic voters support the tax. Complicating matters, a pair of measures funded by Google co founder Sergey Brin and other billionaires are also heading to November's ballot, including one that would bar new taxes on a range of financial assets and another that restricts how tax revenue can be spent in ways that directly conflict with the wealth tax. Heading overseas, lawmakers in China are working on a new bill that would empower state prosecutors to file civil suits against foreign companies alleged to be damaging China's interests. The proposed law would add to an array of legal mechanisms Beijing has created in recent years in order to hit back at foreign sanctions and what Beijing considers coercion, particularly from the US Defendants in civil lawsuits may be ordered to pay compensation and damages and can face criminal penalties if they fail to comply. A final reading on the proposed law is expected to take place by the end of this year. Meanwhile, the Commerce Department has banned the majority Chinese owned EV company Polestar from selling new cars in the U.S. the decision represents the first major casualty of a rule to ban Chinese software and new vehicles that connect to the Internet. Polestar said it would sell its remaining stock of vehicles in the US and provide access to service centers for repairs. The Commerce Department didn't respond to a request for comment. And in markets news today, oil prices are continuing to fall as traders look past an Iranian attack yesterday on a vessel near the Strait of Hormuz and focus instead on an expected resumption of Middle east energy flows. WTI futures declined by more than 3% this morning and are down roughly $20 from a month ago. Global tech stocks are having a down day following a sharp sell off in Asia that saw South Korean regulators halt trading as investors rushed out of memory chip stocks. The dampened sentiment comes amid a report that OpenAI is considering a further delay to its IPO. Japan's SoftBank Group, which has a large stake in OpenAI, tumbled over 12% earlier, while a basket of European tech stocks is dragging down the region's ind. And barring a change in sentiment today, the Nasdaq is on track for its fifth straight day of declines. Coming up, we've got the final installment of our housing series, and we're putting your questions to the Journal's real estate editor. Stick around after the break.

[Comcast Business Narrator]

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[Luke Farkas]

Well, as promised, we are ending this week's series on the US Housing shortage with Wall Street Journal real estate editor Craig Carman. Craig in recent months, listeners and Journal subscribers alike have had a lot to say about the situation in the housing market and an equal amount of questions. So let's start to address some of those, shall we? Starting with a big one that's come up again and again. Are immigrants living in the US unlawfully worsening the housing shortage? Back in 2024, Donald Trump pledged to ban immigrants in the US illegally from getting mortgages. And last year, Vice President Vance claimed they were, quote, taking houses that ought, by right, go to American citizens. What's the situation here?

[Craig Carman]

Yeah, it's a complicated question, and you're right, it's become a highly political one. There was a study from the Urban Institute, a think tank in 2023, that said home loans to und undocumented immigrants living in the US are legal but not very common. There was around 5,000 or so mortgages to undocumented immigrants. And consider that is out of a total that year of about 3.4 million mortgages for home purchases. So you could see it's a tiny fraction of the overall. On the rental side, it's a bit more complicated and there's potential for impact there. The Pew center said that undocumented immigrants lived in a little more than 6 million households in the U.S. rental households, and that's about 10% of all the rental households. So you're starting to see a bit of an impact there. Even then, I don't think you'll see it in terms of prices. In the vast majority of the country, labor costs are rising, and with a lot of construction companies relying on immigrant labor and often undocumented immigrant labor, it's Getting tougher to find people to work on their construction sites, and that is pushing up the cost.

[Luke Farkas]

All right, let's shift to once homes are built, Craig, because we got some questions about how they should be used. This is something that listener Ian Kennedy from Rhode island highlighted about a property that he was considering selling. Let's hear from Ian.

[Listener/Caller]

Given the recent rise in mortgage rates, I'm much more leaning towards opting to try to rent it out. Not much new inventory coming on the market here. Not much new construction coming on the market here. So the rental option just seems like a better long term plan for Craig.

[Luke Farkas]

This sort of own versus rent dynamic is something we've covered throughout our housing series. All of this hits at the central point of the housing supply in air quotes. There isn't a monolith. Everyone's just trying to maximize their returns. Right. How much can you truly shape what the housing supply looks like when it rests with so many individual decision makers?

[Craig Carman]

That's right. This market, this housing market has been stuck in a rut, a sales rut for more than three years now. And while supply has been rising in recent months, for the most part we've been dealing with an undersupplied market throughout much of this housing slump. What housing economists define as a balanced market between supply and demand is when you have about four to six months of supply for sale on the market, that means if no new homes were listed, it would take about four to six months to sell existing inventory at the current price. In 2021, there was only two months of supply on the market. And a big reason for that is interest rates fell to their ever and mortgage rates were around their lowest ever. A lot of people who had higher mortgage rates refinanced, and you had something like 30 million households with mortgages below 4%. And that was more than half of all the mortgages in the US and when you have that, people are very reluctant to sell and they may do stuff like the caller was talking about, which is maybe I'll just rent it out rather than sell it because I have such a cheap mortgage. And that seems to be one of the big issues now. Things have been getting a little better. That supply figure is up to around four and a half months of supply. One thing I have seen in Congress, it's called the More Homes on the Market act, is an effort to try and goose supply back into the market, not by building new homes, but by getting existing homeowners to list. And the idea behind this is they would double the amount that home Sellers could exempt from capital gains to half a million dollars for single tax filers and a million for those who are filing jointly on their tax returns. The idea is that yes, you would be giving up your mortgage rate, but if your capital gains tax was considerably less, that would ease some of the financial burden and that would make more people willing to list their home and bring supply back into the market.

[Luke Farkas]

All right, so maybe a little movement or things that can be done to juice the existing home segment. So let's shift then to new construction. As we heard in the first episode, Menlo Park, California they want density. This was a big feature of sort of their push for new housing. But this led subscribers to ask, why is there so much focus on high density and comparably less talk about expanding the suburbs? Others piled in on this same topic, saying the American dream is a single family house with a yard. And certain politicians keep reframing the housing issue away from that.

[Craig Carman]

The suburbs are sort of a complicated housing situation for the US during the pandemic when people were stuck at home, there was suddenly a housing boom in the suburbs, particularly suburbs of, say, New York City and New Jersey, Westchester County, New York, Connecticut. And homes there were surging in price. There was still no new supply because of not a lot of room and because the NIMBY issue in the suburbs is very strong. The demand for supp suburban homes has cooled off a bit in recent years as more people are going back to the office. But I haven't seen many suburbs that have sort of solved the issue of welcoming more housing. I mean, what I think a lot of developers would like to do is build an apartment tower with 100 or more units in a lot of these suburbs, even building a duplex. So a home for two different families living side by side in an area zoned for single family housing gets a lot of pushback. I don't think we're going to see much change in those dynamics anytime soon. I think the same issues echo when you go out from the suburbs to what is sometimes referred to as the exurbs, which is the area outside of the suburbs that are a little farther away from city downtowns, a little bit cheaper than the suburbs, a little bit easier to build because I think there's a lot more open space. But some of the same issues and

[Luke Farkas]

because you brought up affordability there, I think we should close on that issue. One we got so many comments about, including this one from recent college graduate Jason from Omaha. Let's hear from him.

[Listener/Caller]

Most people are getting jobs in the range of 50 to $75,000, which anyone I know that has a rent payment of around 900, which is pretty normal out here. They're not putting away any money. And it's not just bad because of the down payment on the house, but you also have to think about being able to keep up with those monthly payments. And I just don't foresee people's wages rising at the same level as the cost of living.

[Luke Farkas]

Is Craig hearing that? It makes you wonder whether everything else in the housing discussion is kind of just set dressing compared to mortgage rates.

[Craig Carman]

Say in a word. Yes. I think, you know, mortgage rates are always a critical component to affordability. I think they're especially difficult now because of this lock in effect we were talking about earlier. And suddenly you have all these people who are motivated to hold onto their homes pushing prices up higher and higher, even if the rate of price acceleration is slowed. I mean, home prices have gone up 35 consecutive months. Now. The median home price is over 400,000. If you put 20% down, that means you need $80,000, which is tough for a first time homeowner to come up with. So it really comes down to mortgage rates as the variable that could make housing a bit more affordable for more Americans. And unfortunately, right now it's tough to think of a catalyst that could meaningfully down mortgage rates.

[Luke Farkas]

Craig Carman is the Wall Street Journal's Real Estate Bureau chief. Craig, appreciate you. Thanks so much.

[Craig Carman]

Thanks for your time. Appreciate it.

[Luke Farkas]

And to hear my full interview with Craig, check out today's you Money Briefing podcast, which we've left a link to in our show notes. And that's it for what's news for this Friday morning. Today's show was produced by Daniel Bach and Hattie Moyer. Our supervising producer is Sandra Kilhoff. And I'm Luke Varkas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend. Thanks for listening.

[Laura Nelson]

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