Mortgage Rates Hit 7.2%— But Luxury Home Prices Are Still Surging

Mortgage rates are around 7.2% — and the housing market is increasingly splitting into two very different experiences.

PhD economist Orphe Divounguy explains why higher rates are keeping many buyers on the sidelines while luxury housing continues to perform well. Builders are responding with major incentives, including an estimated $44,000 per home in rate buy-downs and closing-cost assistance to get buyers across the finish line.

At the same time, inventory is rising in parts of the country, giving buyers who can afford to transact more bargaining power. But for many households, higher borrowing costs and a weaker labor market are making homeownership increasingly difficult.

Chris Krug and Orphe also examine what this divide could mean for state tax revenues, particularly as governments rely on income taxes, sales taxes and capital gains.

Everyday Economics is hosted by Chris Krug and PhD economist Orphe Divounguy and is brought to you by The Center Square Newswire Service.