There’s a specter haunting the housing market: the ghost of last year’s mortgage rates. The average 30-year fixed mortgage rate hit 7.10% on Thurs

‘I can’t afford to sell because I don’t want to lose that rate’: 3% mortgage rates will loom large over the U.S. housing market for years to come

submited by
Style Pass
2023-03-18 00:00:05

There’s a specter haunting the housing market: the ghost of last year’s mortgage rates. The average 30-year fixed mortgage rate hit 7.10% on Thursday, the highest reading since November of last year. Higher mortgage rates triggered a drop in demand. Meanwhile homeowners who’ve locked in lower mortgage rates are choosing not to sell, tightening available inventory. That means that the market is losing buyers looking to move up and losing sellers looking to move up, so this lock-in effect is constraining both sides of the market. 

“Record-low homeowner vacancy rates have essentially depleted housing inventory and materially tightened supply,” Goldman Sachs analysts wrote in a research note last week. “On net, this implies a muted impact from [new build] completions on the current supply/demand balance of housing and, ultimately, prices.”

Even if every single-family home under construction was completed and listed on the market immediately afterward, Goldman Sachs added, that month’s supply of homes would still be below historic averages, despite the current pipeline of new homes under construction being historically large.

Leave a Comment