Why home prices haven’t fallen more as the Fed hikes rates

The U.S. housing market is stuck — homeowners who nabbed low mortgage rates before the Fed hiked rates don't want to sell, and that's keeping home sales anemic and home prices high.

Driving the news: A new survey from Zillow shows this "rate lock" phenomenon in action. It finds that homeowners with a mortgage rate below 5% are much less likely to consider selling their home, compared with those who have a higher rate.

• Why it matters: 80% of mortgage holders in the U.S. have rates below 5%, per the survey. It's no wonder existing home sales keep dropping.

What's next: The same survey found that the share of homeowners (with or without mortgages) who say they're considering selling within three years has increased to 23%, from 15% in 2022.

• It's a sign that the housing market is looking a lot more stable than at the start of the rate-hiking campaign when the expectation was that prices would drop, and it wasn't clear how high rates would go. "It makes a lot of sense to try and ride out that storm," said Jeff Tucker, a senior economist at Zillow.
• These days mortgage rates have settled into a range of 6%-7% and home prices have been relatively flat. "People are getting used to it."