The 30-year fixed rate at 2.96% in 2021 turned monthly payments into a pandemic benefit, while the rate hikes from 2022 to 2023 have rewritten the same contract to lock in rates above 6%. The average over the past three years has stabilized at 6.6%–6.8%, indicating that housing rates have never returned to the narrative of "declining" but have shifted from rapid increases to high plateauing. The daily breach of 7% is a result of Treasury yields hitting their limits on rate hike days.

The capital path involves monthly payments consuming transaction volumes, then extracting transaction volumes from builders and brokers. Homeowners with locked-in low rates are not selling, relying on high-priced new homes to support prices while suppressing sales. Mortgage banks are unable to earn volume from new loans, only profiting from servicing existing loans; private equity and family offices are using cash to purchase homes at discounts, replacing buyers who need loans.

This situation is reminiscent of the early 1980s when mortgage rates peaked alongside federal funds, and after a brief spike to 4.5% in 2018, rates fell back. This time, the high levels have persisted for four years, unlike 2018, which saw rapid rate cuts. The industry is in a phase of volume contraction and price stickiness, not the start of a new cycle.

The structural judgment indicates a transfer of pricing power. The mechanism is that the 30-year fixed rate translates each upward movement of the 10-year Treasury into constraints on household balance sheets, with the Federal Reserve managing overnight rates while the housing market pays the long-end plus spreads; even if the White House manages to lower short-term rates, as long as term premiums and inflation risks remain, the daily quote above 7% will not automatically revert to 3%. Those who can pay cash will temporarily gain housing pricing power.

ABAB News · Law of Cognition

Short-term rate hikes lead to monthly payments for long-term mortgages.
If rates do not return to 3% in four years, inventory will become unwilling to sell at locked prices.
The daily breach of a round number is just a delayed confirmation of the weekly survey.