First-time homebuyers hold off on purchases amid 'slim' pickings, high mortgage rates

Published On Oct 26, 2024, 7:00 AM

The housing market is facing challenges with first-time homebuyers hesitating to make purchases due to a combination of high mortgage rates, which have been around 6%, and a lack of available housing inventory. Many potential buyers, like Lindsey Vogel from Virginia, are struggling to find suitable homes despite attending open houses regularly. The current mortgage situation is exacerbated by a phenomenon known as the 'lock-in effect,' where existing homeowners are reluctant to sell their homes, as they secured lower mortgage rates during the pandemic. As a result, the number of home sales has dropped to the lowest level since 2010, especially for entry-level buyers, who made up only 26% of transactions in the resale market last month. Analysts predict limited relief in mortgage rates, which have risen recently, further constraining buyer purchasing power and delaying any potential recovery in the housing market.