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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Mortgage rates can climb while home prices hold firm or rise because rates influence buyers’ budgets, but they do not determine how many homes are for sale. Barry Habib’s explanation is that demand and available supply can shrink at the same time: higher borrowing costs sideline some buyers, while owners with favorable existing mortgages may postpone selling. If the remaining buyers still compete for too few listings, prices may not fall. That is a supply-and-demand explanation, not a guarantee that prices will rise everywhere.
Why higher mortgage rates do not automatically push prices down
A higher mortgage rate increases the payment on a given loan amount. Some buyers then qualify for less, delay a purchase or leave the market, reducing demand. But that change does not automatically add homes to the market. Prices reflect competition among buyers for the homes actually available, not mortgage rates alone.
Habib, founder and CEO of MBS Highway, describes price discovery as a matter of supply and demand. In his HousingWire interview, he said that when demand overwhelms supply, prices are likely to rise. His point is not that rates have no effect: rather, weaker demand need not cause falling prices if the supply of homes for sale also contracts enough.
How supply can tighten when buyers pull back
Owners may stay put rather than give up an older mortgage
When owners have favorable financing on their current home, a move can mean taking on a more expensive mortgage for the next one. Some may therefore delay selling. Fewer resale listings can offset some of the decline in buyer demand caused by higher rates.
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Many resale moves do not add a home to the total stock
A household that sells one home and buys another adds a listing but also adds a buyer. Such moves can increase market activity without adding net housing supply. Habib argues that new construction is an important way to add homes overall, but construction costs and the difficulty of building lower-priced homes can limit how much supply arrives where it is most needed. HousingWire’s interview with Habib presents this as his explanation, not as a universal account of every local market.
What inventory measures—and what it cannot tell you alone
One way to gauge whether available listings are scarce is “months’ supply”: how long the current inventory would take to sell at the prevailing pace of sales. The measure depends on both the number of listings and the rate at which buyers absorb them, so it can change when either changes.
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In a 2024 interview with the Federal Reserve Bank of Atlanta, associate economist Jessica Purviance described less than four months of supply as undersupply. That is the benchmark used in that discussion, not a timeless rule for every market. Purviance also explained that low supply can put upward pressure on prices. The same interview noted that supply and demand had both fallen in the period it covered, helping explain why reduced demand had not produced significant downward pressure on prices nationally; some local markets nevertheless experienced declines or slower appreciation. Read the Atlanta Fed interview.
Why the shortage can be especially acute for lower-priced homes
The number of homes available is only part of the supply picture; the price and type of homes being built matter too. Purviance said in the Atlanta Fed’s 2024 interview that about 40% of new homes built and sold before the pandemic were priced below $300,000, compared with less than 9% at the time of the interview. Those dated figures illustrate a shift in the mix of new homes; they are not a measure of today’s share.
If fewer homes are available at entry-level prices, buyers facing a tighter budget may have limited alternatives even when overall demand cools. Habib’s interview similarly points to construction costs as a barrier to building lower-priced homes. A national supply-and-demand explanation can therefore mask very different conditions by price bracket and location.
How builder incentives can change the comparison
Builders may offer mortgage-rate buydowns, cash at closing or other incentives to make a new home more affordable to finance. The Atlanta Fed’s 2024 interview described both permanent buydowns and temporary or phased reductions. It gave illustrative examples of a 7% market rate being reduced to 6% or 5.5%; those were examples from that interview, not offers available today. The interview also noted that incentives vary by market.
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For a buyer comparing a new build with a resale home, an advertised initial rate is only one part of the deal. Compare the home’s price, the full loan terms, how long any reduced rate lasts, and any cash or other incentive before deciding which option costs less over the period you expect to own it.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What historical rate and price moves show—and do not show
A 2022 Mauldin Economics summary of its interview with Habib reported that the 30-year fixed mortgage rate rose from 3.11% to 6.66% during the period it described, while home values rose approximately 10.4%. These are historical figures reported by the interview summary, not current readings. They show that rates and home values can move upward over the same period; by themselves, they do not establish why that happened or predict what prices will do next. See the Mauldin Economics interview summary.
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Why the answer differs from one market to another
National patterns do not dictate what happens in an individual city or price range. The Atlanta Fed’s 2024 interview described stronger inventory constraints in Atlanta and weaker conditions in southwest Florida during the period discussed. A useful local comparison looks at:
- Months’ supply: listings relative to the current pace of sales.
- Resale listings and new construction: whether the area is adding homes or mainly turning over existing ones.
- Price bracket: whether the homes buyers can afford are available, not just whether total inventory looks high.
- Local demand: employment, population changes and the number of buyers competing for homes.
- Financing incentives: builder offers and their full terms, rather than a headline rate alone.
- How prices are measured: whether a reported change is nominal or adjusted for inflation.
The sources cited here provide a structural explanation and dated examples, not a verified current national mortgage-rate, inventory or home-price reading. Habib’s views and forecasts in older interviews should be understood in their original time context, not treated as a present-day forecast.
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