Low rates are keeping Arkansas homeowners locked in place
Roughly 37% of homeowners with mortgages in Arkansas have a rate below 4%, per Redfin data shared with Axios. That's locking homeowners in place and leaving buyers with few homes to choose from.
Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon: They might have a great rate now but likely can't move without spending a lot more cash, explains Daryl Fairweather, chief economist for Redfin.
By the numbers: Nearly 10% of homeowners in Arkansas have a rate of 6% or above, another 10% are paying 5-6% and nearly 32% have rates of 4%-5%.
Zoom in: Home sales in Northwest Arkansas slowed by nearly 21% in the second half of 2022, according to the Arvest Skyline Report.
- Along with low inventory, interest rates were a factor in the deceleration.
Zoom out: It's not just a local issue. Nine in 10 U.S. homeowners secured mortgage rates below 6% as of late 2022, per the new Redfin report. Meanwhile, mortgage rates have swung between 6% and 7% nationally in recent months.
Yes, but: Buyers are also exploring adjustable-rate mortgages, or buydowns, in hopes of a lower monthly payment, Fairweather says.
Reality check: Lower rates could loosen up some supply, but not enough to meet demand, he says.
- New construction isn't keeping up, either. Fairweather predicts it'll take the U.S. a decade to repair its housing shortage.
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