First American's Kushi says the tide of demographics and pent-up demand matters more to buyers than any single rate move
Mortgage brokers spend a lot of time fielding rate questions from prospective customers who read the headlines and are looking for the right time to make a move. New data from the Mortgage Bankers Association (MBA) show some of those customers are holding off right now.
The 30-year fixed rate climbed to 6.65% for the week ending July 10, its highest level since August 2025, with purchase applications falling 7% from the prior week, according to MBA data released Wednesday.
While rates matter to borrowers, brokers know that selling only rate is a losing battle, because someone will always be ready to undercut your rate. Even with rates elevated, some customers will still be moving forward with mortgage transactions. One mortgage economist said many factors beyond rates are going to drive those transactions.
Odeta Kushi (pictured top), deputy chief economist at First American, said the housing market's underlying fundamentals are more favorable than the rate-driven noise suggests.
"I'll go back to our analogy, which is really that it's the tide that matters," Kushi told Mortgage Professional America. "There's a lot of short-term volatility that we see, and there's a lot of change that we've seen this year. But I think the underlying tide is when we look at demographic demand for housing, millennials are still aging into their prime years. Gen Z are starting to enter the market. That's a tailwind for our industry."
Still pent-up demand
Kushi said strong signs of pent-up demand remain in the market. Since the second half of 2022, housing sales activity has been consistently suppressed below historical norms, and that accumulated shortfall represents deferred decisions that rates delayed but did not eliminate.
"While buying a home is a financial decision, it's first and foremost a lifestyle decision," she said. "And these lifestyle decisions are continuing to happen whether mortgage rates are rising or falling. People are getting married, having kids, and changing jobs. So those are what we consider the tide. The fundamentals that still drive the housing market forward."
The practical implication for brokers, Kushi said, is that clients waiting for a significant rate drop may be waiting for a condition that has little to do with whether buying makes sense for their life right now.
"My advice would be to keep your eye on the tide," she said. "Obviously some of these mortgage rates matter quite a bit. I'm not going to say they're not. But it is important to also remember some of the tailwinds that we have going for us in the industry."
Questions about the labor market
Kushi said the factor she thinks is getting the least attention in the current market is the labor market, specifically the frozen quality of it and what that is doing to housing mobility.
"I think a lot about the labor market," she said. "We've been stuck in this low hiring, low firing, frozen labor market for some time, and that reduces mobility in the housing market. Typically, a job change is a trigger for a move. And so a frozen labor market has direct implications for the housing market."
The effect runs deeper than mobility alone, Kushi said. The bigger issue is confidence in employment.
"Will I have a job? I might have one, but how long will I have it, and do I feel confident enough and secure in my job to make the largest financial decision of my life, which is buy a home?" she said. "Housing ultimately depends on people feeling secure enough to form households, change jobs, relocate, buy homes. So the hiring rate and what's happening in the labor market is a foundation for housing demand."
The data has not yet shown a meaningful deterioration, she said. Unemployment remains low, and the layoff rate has not picked up significantly, though the scattered nature of recent announcements is creating enough uncertainty to affect buyer confidence.
"You see sort of the one-off layoffs in this industry or layoffs from this company," Kushi said. "But we haven't really seen the layoff rate pick up in the job openings and labor turnover survey, and the unemployment rate's still 4.3%."
For brokers, that means a client who is hesitating to make a move could be looking at something other than elevated rates.
"When someone feels like they can potentially get a higher and better-paying job, I think that contributes to housing demand as well," she said. "And so what I'm looking at in the second half of the year — obviously mortgage rates are important, but I'm really looking at the labor market and the signals in the labor market to see if we're trending in the right direction."
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