..which is just more bad news on the affordability front. Obviously high mortgage rates directly affect the cost for new homeowners, since mortgage interest is one of the bigger expenses for home purchasers. But it also ends up freezing the housing market, since it creates a massive disincentive for most people to sell out of their current homes. The typical house that has a mortgage has a rate less than 4%.

So high rates end up both increasing direct costs and reducing the supply of houses on the market, as it becomes a better deal for most existing homeowners to just hang tight to their well-below-market mortgages.

Not sure why this is here rather than the Macro board, but what the heck.

The housing market is a bleeding edge leader of the economy. It’s big, really big, and that makes it important, really important. When housing softens, construction follows quickly. That’s a lot of lumber, paint, appliances and windows that don’t get bought. It’s a lot of salaries that don’t get paid. That trickles back through retail consumer purchases by those households: iterate and reiterate through other consumer purchases and stores.

It’s mortgage originating firms, banks, and title companies. It’s moving companies, furniture stores, and big box home-improvement stores which sell carpeting, new refrigerators, washers and dryers, and other fix-ups on both ends of the transactions. That affects employment at all those firms, and again, iterate and reiterate through the economy.

It affects manufacturing, service, and most other parts of the marketplace. It’s really a very big deal. The upside is that it helps tame inflation. The downside is that, as with most other inflation fighting tools, it hurts a lot of people in the process.