Mortgage rates continue to hover around 7%, as they have since the latter half of 2023 when the Federal Reserve stopped raising benchmark rates. While the conventional wisdom is that high rates are choking the housing market, a new survey suggests it’s not as all-encompassing as one might think.
Bright MLS — one of the nation’s largest multiple listing services that covers six Mid-Atlantic states and the District of Columbia — recently polled buyer and seller agents on what their clients are thinking during their home searches, including thoughts on mortgage rate hikes that have plagued other markets.
Among the 463 buyer agents surveyed, 50% said their clients planned to buy regardless of mortgage rates. Another 23.5% had clients who paid with cash, while 16.4% said rates were a factor but not the primary one.
The notion that buyers are less sensitive to mortgage rates makes sense because many buyers are in the market for the same time-rested reason — a major life event. “Family reasons,” e.g., a marriage, a divorce or having a child — were cited by 14.3% of buyer agents as the reasons their clients were moving, while another 12.1% said it was job related.
The top reason, at 30.7%, was because they were a first-time buyer, despite challenges for this segment of the market. And about 16% of clients were buying a second home or investment property.
This isn’t to say that rates aren’t a factor for prospective buyers, particularly those who have stopped looking. Given the option to give multiple answers for why their buyer paused a home search, 57% of buyer agents pointed to high rates, while 60.9% mentioned affordability and 52.7% said their clients were frustrated by unsuccessful offers.
“[Mortgage rates] didn’t push people out like I think we thought,” Bright MLS chief economist Lisa Sturtevant told HousingWire, adding that many of the people who did buy are repeat buyers. “People have saved a lot, they have a lot of equity, and it didn’t have as big of an impact on the whole pool of buyers as we might have thought.”
With sellers, it’s a slightly different story, although repeat buyers are very likely to also be sellers. Those who bought before 2022 likely locked in a significantly lower rate on their mortgage than they’d get today, as rates are significantly higher than where they were in the latter half of 2021.
When asked to choose as many answers as applicable, 33.5% of agents said a client’s desire to not give up their current mortgage rate was a factor in why they decided not to sell. Nearly half said they could not find a buyer for their home.
There’s a degree of pessimism among agents on the future of the market. When asked what they think buyer activity will be like three months from now, 31.7% said “high to very high,“ a drop of 8 percentage points from Bright MLS’s survey in May 2024. Its Buyer Activity Index declined by 6 points on both a monthly and a yearly basis.
This is in line with other forecasts, as Fannie Mae last week trimmed its estimates for 2024 home sales.
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