Dec 9, 2023 - Economy

How high mortgage rates stalled the housing market

Data: Redfin; Chart: Axios Visuals
Data: Redfin; Chart: Axios Visuals

High mortgage rates have all but frozen the U.S. housing market.

Why it matters: The "lock-in effect" is real. As one real estate agent put it, 2023 was "the year your first home accidentally became your forever home."

  • Many people are interested in moving, but not to swap their 3% interest rate for 7-8%, Minnesota-based Jake Hlebain tells Axios.

Driving the news: U.S. home sales have cratered as owners clamp down on their lower mortgage rates.

What they're saying: "If there's nothing out there for me to buy, why would I sell? We are all kind of stuck in that paradigm right now," chief economist Matthew Gardner at Windermere Real Estate said at a November conference.

Meanwhile, it got even harder for first-timers to make the leap to homeownership this year.

What we're watching: Mortgage rates would need to slide significantly to loosen homeowners' golden handcuffs and boost listing activity, real estate experts say.

  • Some shoppers are starting to accept that rates probably won't fall back to pandemic levels.
  • Others have found deals on new construction, townhomes or condos.

Go deeper: The $1.8 billion verdict that could lower home prices

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