As rates hit 11-month high, what one economist says brokers should tell their customers
Odeta Kushi (pictured top), deputy chief economist at First American, said the housing market’s underlying fundamentals are more favorable than the rate-driven noise suggests.
“I’ll go back to our analogy, which is really that it’s the tide that matters,” Kushi told Mortgage Professional America. “There’s a lot of short-term volatility that we see, and there’s a lot of change that we’ve seen this year. But I think the underlying tide is when we look at demographic demand for housing, millennials are still aging into their prime years. Gen Z are starting to enter the market. That’s a tailwind for our industry.”
Still pent-up demand
Kushi said strong signs of pent-up demand remain in the market. Since the second half of 2022, housing sales activity has been consistently suppressed below historical norms, and that accumulated shortfall represents deferred decisions that rates delayed but did not eliminate.
“While buying a home is a financial decision, it’s first and foremost a lifestyle decision,” she said. “And these lifestyle decisions are continuing to happen whether mortgage rates are rising or falling. People are getting married, having kids, and changing jobs. So those are what we consider the tide. The fundamentals that still drive the housing market forward.”
The practical implication for brokers, Kushi said, is that clients waiting for a significant rate drop may be waiting for a condition that has little to do with whether buying makes sense for their life right now.
