Coldwell Banker Realty CEO Kamini Rangappan Lane has a simple diagnosis for the housing market: it's soft, and everyone knows why.
In an interview with CNBC's "Squawk on the Street" on Thursday, Lane said rising mortgage rates are weighing on housing activity as consumers respond to higher borrowing costs, inflation and economic uncertainty. Rates have climbed in recent months and sit higher than they were a year ago and six months ago.
The silver lining? We've been here before. Lane noted rates are around levels seen in 2023, when about 4 million housing units traded, and said the market is trending toward a similar figure in 2026.
Coldwell Banker Real Estate is a subsidiary of Compass International Holdings, following Compass, Inc.'s (COMP) acquisition of Anywhere Real Estate in January. Coldwell Banker operates a network of residential real estate brokerages and professionals.
Mortgage Pressure
Lane said housing starts and mortgage applications have been declining, and she didn't sugarcoat it: "We are definitely in a soft period right now." Consumers, she said, are reacting to inflation, the news cycle and higher mortgage rates.
The numbers back her up. The average 30-year fixed mortgage rate reached 7.12% for the week ending Sept. 18, while total mortgage applications fell 1.5% and purchase applications declined 0.8%.
As for the fall housing market, Lane said it remains unclear and will depend on broader economic factors. Geopolitical uncertainty, she added, is translating into affordability concerns.
Inventory Challenge
Here's the awkward part of this cycle. Lane said more mortgages are now above 6% than below 3%, compared with the rock-bottom rates many homeowners locked in during the COVID-19 period. That gap is the classic lock-in effect: why sell and take on a pricier loan when you're sitting on a cheap one?
Still, some homeowners are willing to move anyway, whether because they need to relocate or because they've found a home they actually want to buy. That can bring additional properties onto the market, Lane said.
Compass CEO Robert Reffkin recently said 42% of homes on the market had price cuts in September, while national housing supply was up 4%.
Lane's summary of the whole situation is refreshingly blunt: "Inventory is the problem right now."
