US Housing Outlook: High mortgage rates weighing on the housing market

Apollo

Torsten Slok

Research

127 Pages

The authors examine how high mortgage rates have frozen US housing demand without triggering a housing bust. Average new mortgage payments are $2,918 and roughly 50% of mortgages carry rates below 4%, yet homeowners hold around $35 trillion of equity, helping explain why low turnover persists despite weak affordability.

Key Takeaways

Affordability is stretched: Average new 30-year mortgage payments reached $2,918, while 75% of US households can afford homes priced below $300,000.
Lock-in freezes turnover: Roughly 50% of outstanding mortgages carry rates below 4%, while 95% are 30-year fixed-rate, discouraging homeowners from moving.
Housing slowdown breaks records: Existing single-family home sales fell about 25% after the 2022 hiking cycle began, marking the fastest Fed-driven housing slowdown on record.
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