We surveyed 8,537 current homeowners and asked them how rising mortgage rates will impact their future decision to move. We learned that if rates were 1.0% higher than their current mortgage:
- 40% would still move.
- 36% may not move.
- 24% would definitely not move.
With 56% of all transactions reportedly purchased by people who previously owned a home and 24% of those homeowners saying they would definitely not move if they had to get a mortgage with a 1% higher rate, we calculated a sales volume decline of 13.3%. Another 36% said they may not move, so we assume some of these homeowners will stay put due to rising rates. Our survey also shows that older respondents were more likely to be less impacted, probably because they have a lower mortgage balance.
This is a slightly higher percentage than we anticipated, but a much smaller decline than we believe some analysts fear. So far this year, we have seen some impact: The YOY growth in new home sales rates per community has declined every month this year, probably due to rising rates. The rate remains positive.
This does not mean sales will decline 13%, but it does mean that sales should be 13% lower than would otherwise be the case. Economic strength, consumer confidence, and mortgage underwriting standards are just a few of the many other variables that determine sales volumes. We just thought it would be good to understand the extent of the impact of rising rates.
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Methodology: We received 15,000 responses, of which 8,537 were current homeowners. Regional distribution of homeowner responses was 31% Midwest, 13% Northeast, 35% South, and 22% West. We conducted the online survey from June 4–7, 2018.