Home News High Mortgage Rates Have Prevented the Sale of More Than a Million Homes in the U.S.

High Mortgage Rates Have Prevented the Sale of More Than a Million Homes in the U.S.

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Key Takeaways

  • There are about 50 million active mortgages in the United States, most with fixed interest rates much lower than those currently offered. That’s keeping many homeowners from selling their houses.
  • As a result of this mortgage rate “lock-in” effect, there were 1.33 million fewer sales between the second quarter of 2022 and the fourth quarter of 2023, according to a new paper from the Federal Housing Finance Agency
  • Researchers found that for every percentage point that current mortgage rates exceed a homeowner’s interest rate, their probability of putting the house up for sale is decreased by 18.1%.
  • Data from the National Association of Realtors suggests, however, that some homeowners have stopped waiting for lower interest rates in recent months.

Most mortgages in the U.S. are locked in at rates that are far below those that are currently being offered, a dynamic that prevented the sale of more than a million homes from the second quarter of 2022 through the end of 2023, according to a new study.

A new paper from the Federal Housing Finance Agency said that there are about 50 million active mortgages in the United States, most of which have fixed rates much lower than prevailing market rates. The paper found that for every percentage point that current mortgage rates exceed a homeowner’s interest rate, their probability of putting the house up for sale is decreased by 18.1%.

As a result of this mortgage rate “lock-in” effect, researchers said there were 1.33 million fewer sales between the second quarter of 2022 and the fourth quarter of 2023.

Average mortgage rates hovered near 3% following the pandemic, according to government-sponsored enterprise Freddie Mac. Mortgage rates began to rise in 2022 as the Federal Reserve pushed up its influential fed funds rate to fight inflation. Since then, mortgage rates have more than doubled.

Chart courtesy of Freddie Mac


With current rates near 7%, many existing borrowers cannot sell their homes because they would have to pay $511 more per month on average for the same loan amount, the research found.

This lock-in effect has caused a record-low number of homes to be put on the market. However, evidence suggests some homeowners have stopped waiting for lower interest rates in recent months.

According to the National Association of Realtors (NAR), 1.07 million homes were for sale last month, the most for any February since 2020. NAR economist Lawrence Yun said homeowners who have delayed selling their house over the past few years can no longer wait. 

“Maybe consumers are accepting the new normal,” he said in a conference call with reporters. 

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