I matched year-to-date sales volume where a mortgage was used and mortgage rates broken out by conforming and jumbo mortgage volume.
Mortgage volume has been falling (off an artificial high I might add) since 2005, while rates have continued to fall to new record lows, yet transaction volume has not recovered. I contend that low rates can now do no more to help housing than they already have.
Five years of falling mortgage rates have only served to provide stability in volume.
Of course, if supply was normal, home prices could easily be falling, not rising.
While lower rates may not make any more difference, higher interest rates certainly could. When rates begin to tick higher, home prices may feel pressure once again. However, I don’t see any reason for this to happen any time soon.
We are in a precarious position because there’s not much more that Uncle Sam can do to prop up the market, and yet sales volumes are still anemic.