Over 30 million homeowners don’t have a mortgage right now. Here’s why that’s a big warning sign about the housing market

Here’s why that’s a big warning sign the housing marketBY Sydney LakeBY Sydney LakeAssociate EditorSydney LakeAssociate EditorSydney Lake is an associate editor at Fortune, where she writes and edits news for the publication's global news desk

Owners are sitting on their equity

Getty Images—NurPhotoHigh prices and mortgage rates have made it much harder for Americans—especially first-time buyers—to purchase s

Many current owners, especially those with low or no mortgage payments, are staying put rather than selling, further limiting supply and keeping prices high

Now that more Americans own their s outright and are building wealth, fewer are tapping into that equity due to high borrowing costs

The quintessential American dream is to become a owner

For generations, it’s been seen as a symbol of economic stability and a beacon for building wealth

But with mortgage rates and prices remaining elevated over the past several years, that’s blocked many would-be owners from into the housing market

The number of first-time buyers in the U

Is abysmal: in 2004, the number of first-time buyers was nearly 3. 2 million, according to NAR data d with Fortune on Tuesday

The roadblocks of buying a are essentially a chicken-and-egg situation

Older generations who bought s decades ago—and who would typically be ready to downsize by now—aren’t budging out of fear of relatively high mortgage rates

And since that supply isn’t on the market, prices are higher, preventing younger generations from being able to buy a

Plus, many Americans own their outright—meaning they don’t have a mortgage payment

That’s good news for them, considering it’s unly mortgage rates will drop anytime soon, but dismal news for people trying to break into the housing market

The of owners who don’t have a mortgage payment rose to 40% in 2023, up from 33% in 2010, which reflects a trend toward outright ownership and conservative borrowing, according to a Goldman Sachs note published Tuesday

Meanwhile, the housing market is particularly vulnerable for owners who just recently bought. “We’re seeing early signs of risk building within specific and within specific borrower populations, borrowers with limited equity or who are behind on student loans,” Tim Bowler, president of ICE Mortgage nology, said in a statement

People aren’t borrowing against their s because rates are too high—and therefore risky Meanwhile, U

Mortgage borrowers have $11. 5 trillion of tappable equity in their perties, according to ICE Mortgage nology

But their preference to tap into their equity has been more muted than between 2001 and 2008 because it appears borrower demand for expensive and riskier debt has shifted ing the Global Financial Crisis (GFC), according to Goldman Sachs. “Rather, borrowers have focused on paying down their mortgages and owning their s outright,” wrote Goldman Sachs analyst Arun Manohar

That’s because borrowers are more averse to riskier debt ducts (those with a higher interest rate) equity lines of credit (HELOC) Manohar did not respond to Fortune’s request for additional

ICE reported borrowers used just 0. 41% of available tappable equity in the first quarter of 2025, which was less than half of the typical withdrawal rate observed from 2009 to 2021

Still, 25% of owners said they are considering a equity loan or HELOC in the next year, according to ICE’s June 2025 Mortgage Monitor report. “Equity levels remain historically high, and now we’re seeing the cost of borrowing against that equity drop meaningfully,” Andy Walden, head of mortgage and housing market re at ICE, said in a statement. “If the Fed moves forward with anticipated rate cuts, borrowing against equity could become even more attractive in the second half of the year. ” Although the bottom line is more people are buying their s outright or don’t have a mortgage payment out of fear of high prices and mortgage rates, the silver lining is people are building more wealth and less debt by avoiding taking out equity. “The continued slow pace of equity extraction is ly due to factors such as higher mortgage rates, stricter underwriting standards, lower levels of mortgage lending by banks, and more conservative borrowing behavior,” Manohar wrote

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