The trend has caused further strain for the US housing supply crisis, meaning properties stay in the hands of their owners instead of moving to the market.
Growth in the US labor market shattered economists’ expectations in December, with the number of jobs added last month surpassing consensus estimates by more than 100,000.https://t.co/Z6mAYmSpGW
— Mortgage Professional America Magazine (@MPAMagazineUS) January 10, 2025
That so-called “lock-in” effect will remain a factor in 2025 with rates expected to continue hovering near their current levels, Kushi said, although she also noted that the share of outstanding mortgages with a sub-6% rate has slid in recent years.
Around 2022, about 93% of mortgages had a rate below 6%, with that figure slipping to 88% a year ago and 83% now. “We expect that share to continue to fall this year as more people lock into higher mortgage rates,” she said. “I think time is the healer of the rate lock-in effect – but it will still be a factor that really limits a full housing market recovery this year.”
A 2025 market recovery? That may depend on where you live
Unsurprisingly, the market outlook for 2025 varies from one region to the next. A jump in listings was especially evident in Florida and Texas, with further inventory expected to come online if rates moderate even slightly, although strained affordability will remain a challenge for many hopeful buyers across the country.
During the pandemic, almost every market experienced very strong growth – “whereas I think we’re back to a world where real estate is truly local again,” Kushi said. New supply in certain areas, particularly the Sun Belt, could help jolt some buyers off the sidelines and push prices slightly down.