Mortgage Rates Are Above 7%. Is It Better to Rent or Buy a Home Right Now?

High interest rates and expensive home prices are keeping some frustrated buyers on the sidelines. A 30-year fixed-rate mortgage recently crossed the 7% line and remains there, according to the Mortgage Bankers Association. And recently there’s an uptick in some buyers choosing adjustable-rate mortgages that come with a lower loan rate, but higher risk. Meanwhile, macroeconomic conditions are also squeezing homebuilders. So, when could affordability return to the housing market and where can investors find cheap stock opportunities? Suryansh Sharma (morningstar.com/people/suryansh-sharma) is the director of equity research for Morningstar and covers the housing industry.

Sign up for PitchBook (pitchbook.com) or Morningstar Direct (morningstar.com/business/products/direct) to read Suryansh Sharma’s full report, US Housing: 2026 Q2.

On this episode:
00:00:00 Welcome
00:01:25 High Mortgage Rates and Prices Squeeze Buyers
00:02:46 How Rate Hikes and Cheap Mortgages Affect Home Sales
00:07:08 Rent vs. Buying: Comparing Monthly Housing Costs
00:08:11 Housing Market Risks, Mortgage Rate Outlook, and One Undervalued Stock
00:11:39 Ask the Economist: How Elections and the Economy Can Intersect

Check out more from Morningstar:
Are TIPS ETFs the Best Way to Fight Inflation? (podcasts.apple.com/us/podcast/are-tips-etfs-th…)
The Smartest Moves for Bond Investors Today, and What to Do When You Have Too Many Investments (podcasts.apple.com/us/podcast/the-smartest-mov…)
14 Elite Funds and ETFs, and 5 Popular Funds That Just Missed the Mark (podcasts.apple.com/us/podcast/14-elite-funds-a…)

Follow Morningstar on social:
Facebook: facebook.com/MorningstarInc
X: x.com/MorningstarInc
Instagram: instagram.com/morningstarinc
LinkedIn: linkedin.com/company/morningstar

This episode is sponsored by Vanguard: advisors.vanguard.com/engagement/fixed-income

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.