Prices Up. Affordability Up. Wait, What?

I realized this morning that I've officially passed along a family trait, one that's apparently been handed down through generations of Steinhauers.

Collecting.

Before the sun even came up, my youngest was off to Starbucks to snag a few of their limited-edition bear-shaped glass cups. Evidently they're the latest must-have item.

I can’t say I’m surprised. She’s watched her dad collect Starbucks coffee mugs her entire life. It was only a matter of time before she started showing signs of the generational habit of collecting.

Some families pass down blue eyes. We pass down an inability to walk past a limited edition release.

Let’s get to the mortgage news 💪💪

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Read time: ~5 minutes

Rates ended HIGHER compared to last week, and volatility was HIGH. Rates are in the mid 6% range for most loan types without paying discount points. Paying discount points can get you into the low-6’s.

Prices Up. Affordability Up. Wait, What?

Last week's existing home sales report set off the usual wave of doom headlines: home prices hit another all-time record.

But HousingWire's Logan Mohtashami (the Chart Daddy himself) published a piece that flips the script, and it's the nuance every headline skipped. Yes, prices are at record highs. But the growth rate has cooled to just 1.8% annually while wages roaring higher, growing around 3.5%. When your paycheck grows faster than home prices, affordability quietly improves. That's happening right now and almost nobody is talking about it.

His historical context makes it even better. Excluding the 2007-2011 crash years, home prices haven't fallen even 1% in a single year since 1942. Read that again. Waiting for prices to drop means betting against eight decades of history.

The supply side backs it up too. Inventory sits at 1.56 million homes with 4.6 months of supply, right inside what Mohtashami considers the “healthy zone”. More choices for buyers means sellers can't dictate terms, which keeps price growth tame.

For perspective: price growth hit 10% in 2020 and 19% in 2021. Today's sub-2% growth is, as Mohtashami puts it, "just what the housing doctor ordered."

As real wage growth outpaces the increase in prices, the math moves in your favor. It won't make headlines. But it's the healthiest setup this market has seen in years.

The ROAD Act Is Law. What Should Congress Tackle Next?

Two weeks ago we told you the housing bill could become law automatically if the President simply did nothing for 10 days. At 12:01am on July 11, that's exactly what happened. The most significant housing legislation since 1990 is now law, without a signature.

So, victory lap complete. Now the honest question: what's next? Because here's the fine print even I missed: Section 1202 of the bill confirms that no additional funds are authorized to carry it out. It's a policy bill, not a funding bill. The Urban Institute put it well: "laws don't build homes." Here's where I believe Congress needs to aim next.

Fix the labor shortage. The construction workforce gap is one of the biggest drivers of building costs, and the ROAD Act barely touches it. The Urban Institute specifically calls for promoting workforce development, apprenticeship programs, and immigration pathways for construction trades. You can streamline every permit in America, but if nobody's swinging the hammer, homes don't get built. Like Kreg mentioned last week, Meta is launching America’s Workforce Academy to fast-track people into skilled trades for free. That’s a great first step!

Tackle material costs. Lumber, steel, and other building materials remain punishingly expensive, and tariff policy is making it worse. Exempting building materials from tariffs is the fastest single lever Congress could pull to lower the cost of new construction. This one is politically thorny, but the math is undeniable.

Update the capital gains exclusion. We covered this a few weeks back and it belongs on Congress's list: the $250K/$500K home sale exclusion hasn't been touched since 1997. Roughly 13 million long-time homeowners face tax bills if they sell, so they don't. Indexing it to inflation would unlock inventory in established neighborhoods overnight. NAR is actively lobbying for it.

Direct help for first-time buyers. The ROAD Act's small-mortgage pilot (loans under $100K) and manufactured housing reforms help at the margins. But a refundable first-time buyer tax credit, lower rates and/or expanded down payment assistance would move the needle faster for the first time buyers clawing their way in against cash-rich competition.

The bill that just became law is the on-ramp. These four are the highway. Congress proved it can pass housing legislation with massive bipartisan margins. Hopefully they keep the momentum going.

Here We Go Again: The Strait of Hormuz Is Back

I told myself I was done writing about Iran. I wasn’t going to do it.

But the people need to know why rates are popping pre-market.

This morning, President Trump declared the US is "taking over" the Strait of Hormuz, with fresh strikes to ensure freedom of navigation. Iran says the strait is closed "until further notice." Brent oil rose touched $79 a barrel after gaining 5.4% last week, and mortgage rates are popping right along with it.

You know the chain by now: oil up, inflation fears up, Treasury yields up, rates up. Elevator up, escalator down.

But here's the more interesting story underneath: the world is adapting. Strait traffic never rebounded past a third of normal volumes after the June peace deal, yet oil sat near just $71 as recently as July 10. Production is rising in the Americas, and Saudi Arabia and the UAE are building pipelines to bypass the strait entirely. Analysts expect prices near $90, but the $200 doomsday scenarios from March are off the table.

Every escalation moves markets a little less than the one before it. The world is learning to live without this waterway. Rates will eventually follow.

We'll keep watching so you don't have to. Promise.

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