Busting the myth that is the rate lockdown thesis

Housing professionals and economists repeatedly assert that American homeowners are staying in the same houses longer and provide a few theories as to why.

One such theory is the rate lockdown thesis. It claims that Americans are staying in their homes longer to keep their lower mortgage rates. When mortgage rates rise, it becomes less desirable to move up to a bigger, more expensive home.

Personally, I have never been a fan of this thesis. The idea that homeowners, en masse, are refusing to move due to their individual mortgage rates goes against well established economic fundamentals.

The rate lockdown thesis is easy to test. If it holds up, then when mortgage rates fall, homeowners who have been anxiously waiting will put their homes on the market, and inventory will open up.