For decades, policymakers, economists, and the media have repeated a simple narrative: when mortgage rates fall, housing demand rises; when rates rise, housing demand falls. It’s a story that appears intuitive, and because of that simplicity, it has shaped how both Wall Street and Main Street understand housing cycles.
But the reality is far more complicated. In fact, the evidence pouring in from the housing market today suggests the opposite of what the mainstream narrative would have you believe. Mortgage rates have fallen to their lowest levels in about a year, yet conditions across the housing sector—from permits to builder sentiment—continue to worsen.
The critical insight is this: interest rates don’t drive the housing market—jobs, incomes, and macroeconomic conditions do. When the economy slows, mortgage rates follow Treasury yields lower, not because of central bank magic, but because investors seek safety. And that environment—of slowing growth and rising unemployment—is the last place you’d expect new homebuyers to step forward.
This post will unpack the evidence, look back at historical parallels like the 2000s housing bust, explain why mortgage rates are tied to the Treasury market, and explore what the latest data from builders, agencies, and leading indicators tells us about
[...]
Creating freedom through Crypto as a Community