National Housing Market Outlook

Surveys Confirm Little Impact from Rising Rates

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John Burns

February 22, 2018

CNBC did a 95-second clip on rising mortgage rates, including an interesting survey from Redfin about what would happen if mortgage rates rose to 5%. Redfin’s survey of 4000 home buyers concluded that:

  • 6% of buyers would not purchase at all.

  • 20% would purchase a lower-priced home.

  • 20% of buyers would purchase with more urgency, in fear of rates continuing to rise.

  • 25% of buyers would slow their plans to buy a home.

Our survey of 300+ home builders showed similar findings:

  • 29% would likely see little to no impact on sales, especially to affluent buyers who currently own their home.

  • 56% would likely experience a 1%–10% decline in sales volumes, which is not significant enough to cause them to drop prices.

  • 15% would experience a decline in sales of 10% or more, especially to entry-level buyers struggling to qualify.

This thinking falls in line with our 4-5-6 rule, where one of the 4 disruptors (this time the economic disruption of rising mortgage rates) impacts each of the 5 life stages differently, which helps us answer several of the 6 key questions: who will be buying, what will they buy, when will they buy, and where will they buy. Rising mortgage rates do not impact everyone the same.

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John Burns
Chief Executive Officer
As CEO, John grows, leads, and supports a team of passionate, articulate, likable, and smart experts. Together, we solve today so our clients can navigate to tomorrow.

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