What Changed?
Mortgage rates eased in early 2026, but the resale market still doesn’t “clear.” Homeowners who locked in sub-4% mortgages during 2020–2021 face a large payment jump if they move, so many simply don’t. That keeps listings thin even as demand stays price-sensitive.
The contradiction is that affordability pressure is high, yet prices remain firm in many markets because turnover is still unusually low. Builders can offer incentives to create a deal at the margin, but the existing-home market can’t replicate that flexibility at scale.
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The Numbers
30-year fixed mortgage rate: 6.06% (Freddie Mac, week of Jan. 15, 2026); 7.04% a year earlier
Existing-home sales: 4.35 million (SAAR) in Dec. 2025; median price $405,400
Inventory: 1.18 million homes; 3.3 months’ supply (Dec. 2025)
Rate lock-in: 52.5% of mortgaged homeowners have a rate below 4% (Q2 2025)
Builder response: 65% used sales incentives; 40% cut prices, average cut 6% (Jan. 2026)
Mobility: 2.1% moved to a different state and 8.9% moved within the same state in 2024
Why It Matters
Housing lock-in is a real-economy constraint because it limits movement, not just homebuying. When resale inventory sits near a 3-month supply, households have fewer workable options to relocate for a job, right-size for life changes, or move closer to family support. That kind of friction shows up quietly, as slower labor reallocation and fewer “fresh starts” for household balance sheets.
It also reshapes consumption. Instead of the classic “sell, move, refurnish” cycle, more owners choose “stay, renovate.” Harvard’s Joint Center expects homeowner remodeling outlays to reach about $524 billion in early 2026. That supports contractors and materials, but it’s a different growth mix than broad turnover-driven spending across services and durable goods.
Finally, the split between new and existing supply matters for macro plumbing. If builders are doing more of the market-clearing through incentives, the economy becomes more dependent on new construction capacity, lot availability, labor supply, and financing channels. The resale market remains the missing transmission mechanism.
Takeaway
Lock-in doesn’t need a crash to matter. It slows mobility, redirects spending toward maintenance, and keeps the economy from adjusting as smoothly as it should. Housing is still a bottleneck—and the cost is flexibility.
— Lauren
Editor, American Ledger
Resources
Freddie Mac, January 2026 https://www.freddiemac.com/pmms
National Association of Realtors, January 2026 https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-5-1-increase-in-december
National Association of Home Builders, January 2026 https://www.nahb.org/news-and-economics/press-releases/2026/01/builder-sentiment-loses-ground-at-start-of-2026
U.S. Census Bureau, September 2025 https://www.census.gov/topics/population/migration/guidance/acs-1yr.html
Harvard Joint Center for Housing Studies, October 2025 https://www.jchs.harvard.edu/blog/remodeling-expected-continue-slow-steady-growth-next-year