Mortgage Rates Drop as Housing Supply Increases, Leaving Buyers in a Bind

Demand in the housing market has plummeted, with mortgage applications dropping 39% from 2019 levels, leading to increased housing supply as homes sit longer on the market. Despite mortgage rates stabilizing around 6.9%, high home prices, which surged during the Fed's rate repression in 2020-2022, continue to suppress demand. The collapse in mortgage originations has also impacted the mortgage industry, with significant layoffs. Many potential homebuyers are waiting for prices to fall, incomes to rise, or rates to decrease, keeping the market frozen.