Surging mortgage rates are undoubtedly dissuading households from moving due to the cost of giving up low fixed rate mortgages, weighing on home sales and inventory. But a similar decrease in sales in the UK, which does not have long-term fixed rate mortgages, suggests worsening affordability is the key factor behind falling sales. While that implies sales will recover as mortgage rates fall back, rate lock-in will continue to keep the existing home inventory tight and new home sales are therefore set to outperform.
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