We’ve all been wondering what 5% plus mortgage rates would do to the hot housing market, and now we’ve got that and a bag of chips. This topic is something very near and dear to my heart because going back to the summer of 2020, I have said that one of the only factors that could cool down the housing market was the 10-year yield getting over 1.94%, which would result in higher mortgage rates.
The home-price growth from 2020 through 2022 has been so unhealthy that I’ve labeled this a savagely unhealthy housing market as inventory has once again collapsed on a year-over-year basis in 2022. As a result, I’ve been rooting for mortgage rates to rise to create a balancing impact on this housing market.
Have higher rates worked? It’s still early to see the full effects, but here’s what we can tell from current data.