US Housing Market Resilience

Despite rising mortgage rates, the US housing market continues to thrive with house prices reaching record highs. The usual relationship between interest rates and house prices, where an increase in rates leads to a decrease in prices, is not holding true this time. The reason for this anomaly is the freeze in the housing market due to many homeowners locking in low mortgage rates, causing a shortage of available housing inventory. While this shortage affects demand, it is balanced by a strong new home market and increased spending on remodeling, which has actually had positive macroeconomic consequences.