Homebuyers defy 6% mortgage rates as housing market stays resilient

Despite mortgage rates just dipping below the 6% mark, American homebuyers aren’t retreating just yet.

While high mortgage rates have historically chilled demand, the latest data reveals a defiant consumer base: new home sales remain higher than year-ago levels, and a massive surge in refinancing suggests homeowners are pouncing on any slight dip in borrowing costs.

Recent data from the Census Bureau reveals that while new home sales dipped slightly by 1.7% in December, the market remains surprisingly resilient, with annual sales outpacing 2024 levels by nearly 4%. 

The Mortgage Bankers Association additionally reported Wednesday that refinance applications are 150% higher than the same week last year, and up 4% from the previous week, potentially signaling that homeowners who bought at 7% or 8% are racing to lower their monthly overhead.

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“The growth in mortgage demand reflects the gradual erosion of the lock-in effect, which began in early 2022 with the Fed [pivoting] to higher interest rates. Rising inventory in many markets has brought more choices to consumers and slowed home price growth,” StreetMatrix real estate analyst Jonathan Miller told Fox News Digital.

New home sales and mortgage application data offer a fresh pulse on the state of America’s housing market. (Getty Images)

“While many potential homebuyers are still hoping for mortgage rates to fall sharply,” he continued, “there is a growing recognition that they won’t return to the rock-bottom levels coming out of the pandemic and that home prices are only getting higher.”

It’s a potential sign that buyers are still acclimating to a new normal of borrowing costs, even as the median price tag for a new build jumped to $414,400 last month.

“The existing home market… remains constrained by the lock-in effect, with many owners unwilling to trade a 3% mortgage for a 6% one,” Palm Beach-based RWB Construction Management’s Robert Burrage chimed in. “So while both markets are supply-limited, new construction has been more agile in stimulating demand.”

Housing supply currently sits at 7.6 months. Anything over six months typically cues a buyer’s market, giving shoppers more leverage to negotiate for concessions.

“Because we build exclusively for end users, not as a spec developer, our pipeline looks very different from what you see in the national new home sales data,” Burrage noted.

“When a custom home starts, it’s typically tied to a committed client who has already secured financing or is paying cash. That removes a lot of the speculative risk from the equation,” he expanded. “So even if new home sales tick down nationally,…