Rates don't affect prices they way people think they do. People buy the mortgage they can afford, so low rates can raise home prices. This is 5x-10x leveraged,

Rates don't affect prices they way people think they do. People buy the mortgage they can afford, so low rates can raise home prices. This is 5x-10x leveraged, so it really moves prices. Home builders borrow to build, so higher rates hurt on the supply side. Currently, because people refinanced into 3% long-term mortgages, some people are stuck because they can't afford to move. This also hurts broader market dynamism because people aren't relocating as much. Same with job uncertainty. People aren't changing jobs because they're worried, but this is leaving companies with mismatched labor. And that's just rates. There's also supply. Mortgage rates should have never been 3%. The Fed targets 2% inflation, so loaning 10-to-30-year money at a real rate of 1% is silly. It really is free money. The problem is mortgage rates are linked to the 10y treasury yield, and that was moving for macro reserve currency reasons. Loans for home builders could be subsidized, but NIMBY policies are a larger issue. I don't know what to do about people locked into low mortgage rates. It's actually a Silicon Valley Bank situation, but at an individual level. If you can wait for the loan to mature (10y might be enough), you come out ahead, but if you have to sell early, you take a loss. We can't go back to free money, portable mortgages disadvantage new buyers, and people really don't want to realize these losses.