"The COVID fog shows up when decision-makers treat the 2.65% mortgage trough from January 2021 as a normal frame of reference rather than what it was, an extreme, unsustainable outlier created by a crisis policy response. Mortgage rates rose more than five percentage points from that trough, reaching 7.79% in October 2023 and easing to about 6.2% by September 2024."
"The Consumer Financial Protection Bureau provided a simple example: on a $400,000 loan, principal-and-interest payments were about $1,612 at 2.65% (Jan 2021) and $2,877 at 7.79% (Oct 2023), a jump of $1,265, or about 78%. Even after rates eased to around 6.2% (Sept 2024), the payment was still about $2,450, roughly $838 higher than the trough (about 52% higher)."
"The biggest competitor to a Texas builder in 2026 is not another builder—it's the buyer's memory. Builders live and die by affordability, and affordability is measured by monthly payments."
The Texas housing market faces a psychological barrier rather than a fundamental crisis. Market participants—buyers, sellers, analysts, and builders—anchor their expectations to January 2021's 2.65% mortgage rate, an unsustainable crisis-driven extreme. Mortgage rates have risen over five percentage points, reaching 7.79% in October 2023 and settling around 6.2% by September 2024. This rate increase combined with rising home prices creates substantially higher monthly payments: a $400,000 loan costs $1,612 monthly at 2.65% versus $2,877 at 7.79%—a 78% increase. Even at current rates around 6.2%, payments remain 52% higher than the pandemic trough. This backward-looking mindset prevents decision-making despite changed market physics, where buyers now shop by payment affordability and resale inventory remains thin.
Read at www.housingwire.com
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