Housing remains an economic drag as high mortgage rates freeze the market
SPY•Mortgage rates near 7% are keeping buyers and sellers sidelined, leaving U.S. housing activity weak while prices largely hold steady. Cresset strategist Jack Ablin said the market may remain frozen until rates move meaningfully lower, likely toward 6% or below.
1. Rates stall housing activity
The U.S. housing market remains in a stalemate, with high mortgage rates keeping buyers on the sidelines and discouraging homeowners with lower-rate loans from selling. Cresset chief investment strategist Jack Ablin argued that mortgage rates, rather than the Fed’s policy rate, are now the key factor driving housing activity.
2. Weak sales, limited supply
The result is weak sales and limited activity rather than falling home prices. Homebuilders face high financing costs, labor shortages and elevated material prices, while a slowdown in multifamily construction may eventually lead to fewer rental units and renewed upward pressure on rents.
3. Economic effects
Fewer home sales reduce spending on furniture, appliances, renovations and related services, while sluggish construction weighs on growth. Ablin said housing is likely to remain frozen until mortgage rates move meaningfully lower, likely toward 6% or below.
