How high mortgage rates stalled the housing market
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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.
- In October, deals that went into contract neared their lowest point in history, Axios' Matt Phillips reports.
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.
- You now have to earn $115,000 a year to afford a typical house, Axios' Emily Peck reports.
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
