Locked rates, lifted prices: the US market missing 1.72M sales
Actual figures confirm the structure where half of mortgages locked near 3% rates freeze transactions and block price falls. The 50 state rent edge is flagged as an averages comparison.
Updated Oct 19, 2026
Frozen transactions: a 3.91M pace and a 25% drop
In 2026-01, US existing-home sales fell 8.4% month over month to a 3.91M-unit annual pace, the steepest monthly drop in 4 years and the slowest pace in 2. The median price rose to $396,800 for a 31st straight month, while inventory sat at 1.22M units, a 3.7 month supply. Sales sit about 25% below pre-pandemic levels for a 4th year, and the FHFA estimates the lock-in effect erased 1.72M transactions from 2022 Q2 through 2024 Q2.
Half locked: 19.2% below 3% and a 2.54 point average gap
Sub 3% mortgages are 19.2% of the total and 3 to 3.99% loans are 29.9%, leaving about half of all mortgages locked below market rates. Per the FHFA, the average outstanding rate sat 2.54 points below market as of Q2 2024. The 6% plus share rose from 7.3% in Q2 2022 to 22.5%, the highest since Q2 2015.
Rates up, prices not down: plus 7.0% versus minus 5.6%
The lock-in effect not only freezes transactions but offsets the price correction rate hikes were meant to deliver. Per FHFA estimates, the supply squeeze lifted prices 7.0%, topping the 5.6% direct rate drag, for a net above normal-market levels. With average rent at $1,785 and average mortgage payments 38% pricier, the math points the same way as surveys finding renting cheaper in all 50 states. Simply comparing 3 to 5% home appreciation with around 10% equity returns makes the invest-the-difference renter math work — but that compares averages, not any single household's answer.
The average trap and regional gaps
The 50 state comparison, the 38% gap, and the 10% return are national averages, and conclusions shift with region, timing, taxes, and moving plans. The 2026-01 sales plunge is one month of data, not a settled trend, and later rate, inventory, and policy shifts can change it. Just as a past crash never guarantees a present floor, an average rent edge never justifies renting for every household.
Sources
- US Mortgage Lock-In Effect Is Freezing Supply, And Quietly Inflating PricesAccessed Oct 19, 2026
- Renting Is Not Throwing Money Away: The Value of FlexibilityAccessed Oct 19, 2026
- Existing US Home Sales Collapse Despite Falling Mortgage RatesAccessed Oct 19, 2026