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It’s not that simple because one needs to factor in home prices. But we can look in isolation.
 

Despite mortgage rates declining a full percentage point from 7.26 percent in mid-January to 6.29 percent in mid-December, existing home sales have gone virtually nowhere.

In November of 2022, seasonally adjusted existing-home sales were 4,120,000 annualized. In November of 2025, seasonally adjusted existing-home sales were 4,130,000 annualized.
 

The National Association of Realtors seasonally adjusts home sales, but for three straight years we see seasonal adjustment peaking in February.

Existing-Home Sales vs Mortgage Rates
 

At first glance it might appear that home sales are fluctuating a bit with mortgage rates. But check out the red and blue highlights.

The red highlight shows the mortgage rate in January of 2025 was 6.96 percent. The blue highlight shows annualized existing-home sales of 4.27 million, a relative spike.

Existing home sales are recorded at closing so the applicable interest rate was a month or 45 days earlier.

Interest Rate Nonsensitivity

In the K-shaped economy, it appears there are approximately 4 million buyers who are not interest rate sensitive, at least in a range of interest rates between 5 and 7.5 percent.

Other factors are in play, including price and how well the stock market is doing. So it’s not just a matter of interest rates.

But as long as the stock market is rising, interest rates are in this wide band, and the economy is not in recession, there will be about 4 million transactions.

Existing-Home Sales Flounder at the Same Level for Three Years

Earlier today I noted Existing-Home Sales Flounder at the Same Level for Three Years

Existing-home sales show no signs of life despite falling mortgage rates.

“Existing-home sales increased for the third straight month due to lower mortgage rates this autumn,” said NAR Chief Economist Lawrence Yun. “However, inventory growth is beginning to stall. With distressed property sales at historic lows and housing wealth at an all-time high, homeowners are in no rush to list their properties during the winter months.”

Well, that didn’t happen. NAR seasonal adjustments are garbage. For four consecutive years the NAR shows seasonal increases between October and February. So, expect another couple of months of increases then declines.

Yun failed to mention home prices or the stock market, but he did mention median sales price.

The “Median Sales Price is $409,200, up 1.2% from one year ago ($404,400) – the 29th consecutive month of year-over-year price increases,” according to the NAR.

The NAR makes no attempt at all to seasonally-adjust prices. And that compounds the comparison.

To get a realistic sense of whether home prices are rising or falling, however, what we really need to see are repeat measures of the same home over time.

I am working on a post to incorporate the Fed funds rate, real interest rates, and Case-Shiller national home prices to tie everything together.

Meanwhile, the Fed created a big mess for which it has no answer outside of a hard recession that plunges home prices to modestly affordable levels. Asset prices in general may need to drop as well.

Lowering interest rates in isolation may do little but increase the bubble.

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