The Housing Market’s Holiday Gift: A Loosening Lock-In Effect
The housing market is showing early signs of life after a prolonged slowdown, with existing-home sales posting modest gains and expectations for continued improvement. While activity remains well below pre-pandemic levels, momentum is building as mortgage rate lock-in, one of the biggest barriers to movement, begins to ease. Homeowners who secured ultra-low rates during 2020–2022 have been reluctant to sell, but the gap between older mortgage rates and current rates is slowly narrowing, allowing for gradual increases in resale activity even in a higher-rate environment.
This recovery is unfolding unevenly across the country. In states where many homeowners still hold mortgages far below historical norms, sales remain sluggish as high prices and low rates reinforce staying put. In contrast, states where mortgage rates on existing loans have moved closer to pre-pandemic levels are seeing stronger rebounds in home sales. Over time, life changes such as job moves or family needs are beginning to outweigh financing concerns, helping restore housing turnover, but the pace and impact vary widely by region.
