Despite a cooling housing market and declining mortgage applications, home prices remain persistently high due to an unexpectedly low inventory of homes for sale. Many homeowners are choosing to stay put, reluctant to part with low-interest mortgages secured during the pandemic-era rates. This “lock-in effect” has sharply reduced housing supply, which continues to support elevated home prices even as demand has softened.
Economists anticipated a drop in prices as borrowing costs rose, but the limited supply has countered that expectation. With fewer new listings and slowed construction due to higher financing costs for builders, buyers are competing for a smaller pool of homes. The result is a surprisingly resilient market where affordability remains a top concern.
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