99% of borrowers have a mortgage rate lower than 6%

There’s a specter haunting the housing market: the ghost of last year’s mortgage rates. The average 30-year fixed mortgage rate hit 7.10% on Thursday, the highest reading since November of last year. Higher mortgage rates triggered a drop in demand. Meanwhile homeowners who’ve locked in lower mortgage rates are choosing not to sell, tightening available inventory. That means that the market is losing buyers looking to move up and losing sellers looking to move up, so this lock-in effect is constraining both sides of the market. 

“Record-low homeowner vacancy rates have essentially depleted housing inventory and materially tightened supply,” Goldman Sachs analysts wrote in a research note last week. “On net, this implies a muted impact from [new build] completions on the current supply/demand balance of housing and, ultimately, prices.”