The dam holding back a flood of buyers from entering the housing market isn’t going to break any time soon. But cracks may be starting to show.
New results from the Inman-Dig Insights consumer survey reveal that the “rate lock-in” effect has loosened its grip on potential real estate brokerage clients over the past year, contributing to a rise in plans to enter the market.
- The share of working U.S. adults who expressed some degree of openness to buying a home within 12 months rose to 41 percent in early October from 35 percent at the same time last year.
Not all of these people will end up buying in that time frame. But this six-point swing signals a growing appetite for housing that might well contribute to a gradual uptick in sales, an Intel analysis of the survey data suggests.
Intel sought to understand who these newly interested potential buyers were, and what nudged them to reconsider entering a market that seemed unappealing to many only a year ago.
It’s a story of falling mortgage rates, obviously. But it’s also a story of consumer psychology and a growing degree of comfort with the new rate environment.
And it’s drawing in more groups of buyers than one might guess.
Read the full breakdown in this week’s report.
Who’s driving the shift
To help explain the six-point swing in openness to purchase a home in the coming months, Intel examined the main groups of potential buyers who responded to two surveys — one conducted in October 2024, and another conducted in the early days of this month.
These groups of working U.S. adults primarily consisted of renters, homeowners without a mortgage, and homeowners with mortgages in various rate tiers.
Predictably, today’s lower mortgage rates are attracting interest from renters, many of whom have felt priced out of being able to afford their first purchase.
- Renters who say they’re likely to buy in the next year made up 17.2 percent of working U.S. adults in early October, up from 15.9 percent the same time last year.
Also expected was the lack of a significant shift in the share of the likely buyer pool made up of homeowners without a mortgage. Compared to other groups, these people are not “locked in” by a rate, and have been freer to enter the market as they please.
- 5.5 percent of working adults in October owned a home outright and said they planned to buy again in the next year — up slightly from 5.2 percent in October of 2024.
It’s also the case that few of the homeowners that locked in historically low mortgage rates in years’ past are interested in jumping up multiple points to purchase again at today’s home prices.
- Homeowners who are willing to give up their sub-4-percent mortgage rate and potentially buy a home in the next year made up only 3.7 percent of working U.S. adults in October, a share that’s barely budged from last year’s 3.4 percent.
For these homeowners, the widely discussed “rate lock-in” effect remains in full force.
But here’s where the results begin to surprise, and reveal something new for real estate professionals.
While one might expect homeowners with a mortgage above 6 percent to be least shackled by today’s prevailing rate, they made up only the third-largest group of newly eager buyers.
It’s the rate tier below them that has been most persuaded to consider a move.
- Homeowners with a mortgage rate between 4 percent and 6 percent who say they’re at least somewhat likely to buy a home in the next 12 months rose to 8.5 percent of all working adults in October from 5.5 percent the year before.
This means that roughly half of the growth in the likely buyer pool over the past year can be explained by a single group: homeowners with a mortgage rate between 4 percent and 6 percent switching their answers from “not likely to buy” to “likely to buy” in the near-to-mid future.
It’s a pretty clear sign that as long as homeowners are within a couple points of the market on rates, many of them no longer see themselves as locked into their current rate.
Predictably, this effect was strongest in the group of homeowners that was just within reach of today’s rate environment, with existing loan rates between 5 percent and 6 percent.
But even homeowners with rates between 4 percent and 5 percent were significant participants in the shift. In fact, members of this group who newly reported a desire to buy soon outnumbered those who newly expected to hit the market and ditch a mortgage rate above 6 percent.
Reasons for this relative weren’t spelled out in the survey. But it’s worth noting that the vast majority of current homeowners with a rate higher than 6 percent would have moved into their current residence more recently than someone with a rate below 5 percent. The reluctance of this group to move could just be explained by the fact that many just haven’t been in place long enough to want to go through the process again.
This leaves us with the clear impression that a segment of the population is increasingly comfortable with giving up a better rate in order to move if the rate is in the low-to-mid sixes, in a way they might not have last year.
And if market conditions continue in this direction, this trend may provide a much-needed boost to the real estate industry in the 12 months ahead.
About the Inman-Dig Insights Consumer Survey
The Inman-Dig Insights consumer survey was conducted from Oct. 8-9 to gauge the opinions and behaviors of Americans related to homebuying.
The survey sampled a diverse group of 3,000 American adults, who ranged in age from 24 to 65 and were employed either full-time or part-time. The participants were selected to produce a broadly representative breakdown by gender and region.
Statistical rigor was maintained throughout the study, and the results should be largely representative of attitudes held by U.S. adults with full- or part-time jobs. Both Inman and Dig Insights are majority-owned by Toronto-based Beringer Capital.
