As pandemic-era assistance programs wind down, housing remains cost prohibitive for millions of U.S. households, and lower-cost housing is clearly needed along with investments to preserve the country’s aging housing stock and respond to climate change.

Those are among the key conclusions of The State of the Nation’s Housing 2023, a new report from the Harvard Joint Center for Housing Studies.

Harvard’s annual report, released June 21, noted that recent interest-rate hikes have pushed homeownership out of reach for millions of renters at a time when large numbers of millennial households are at prime home buying ages. Higher interest rates have also sparked a slowdown in the construction of new single-family homes, even as a nationwide housing shortage contributes to high housing costs, Harvard researchers said.

According to the Harvard report, U.S. housing markets continue to cool as higher costs weigh on both homeowners and renters. Home sales and construction levels have declined, while rental markets are experiencing sharply reduced rent growth and rising vacancy rates, the report stated. Nevertheless, home prices and rents remain elevated from pre-pandemic levels, leaving millions struggling with housing cost burdens, priced out of homeownership, or without shelter at all.

Between 2019 and 2021, the country saw the most significant drop in housing affordability in years, with cost burdens reaching record levels, the report stated.

“Housing is a crucial engine of economic growth,” said Chris Herbert, managing director of the Cambridge, Massachusetts-based Joint Center. “As the pandemic highlighted, high-quality, stable, and affordable housing is foundational to widespread wellbeing and, as such, merits and necessitates greater public attention.”

“Beyond the challenge of affordability, public and private investments are needed to mitigate the risks to the U.S. housing stock posed by climate change, and to expand options for older adults to age safely and successfully in their communities,” researchers added.

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