US housing (all housing, everywhere, now that you mention it) is sensitive to rates. By definition.

Regular Americans, and even most “irregular” ones, don’t buy homes. Rather, they agree to a ridiculously long period of fixed monthly payments in a glorified rent-to-own arrangement with the bank.

Affordability, such as it is, thus hinges to a very large degree on the rate associated with those arrangements. On the off chance you haven’t noticed, those rates rose quite sharply over the past couple of years, precipitating, exacerbating and otherwise facilitating one of the more onerous housing affordability environments in living memory.

Eventually, the market froze solid. Existing homeowners, shackled by the so-called “golden handcuff” effect, were unwilling to list their homes, creating a severe inventory drought which in turn propped up prices for resale properties even as high rates squeezed demand. Suffice to say this housing market’s considerably more sensitive to rates than housing is by its very nature.

The crunch eased since April, with would-be US homeowners gaining tens of thousands of dollars in buying power thanks entirely to a decline in rates (prices remain at or near records). The rate relief was courtesy of a Treasury rally which went into overdrive two weeks ago, as benchmark US borrowing costs fell the most since Lehman, triggering a commensurately (almost) large drop in mortgage rates.

Fast forward a week and rates fell again, albeit just barely (last week’s extreme moves in the US rates complex were faded by the end of the week, as the risk tone on Wall Street improved). The 30-year fixed on the MBA’s gauge was 6.54%, down a whole one basis point over the week, to the lowest since the week of May 3, 2023.

As the figure above shows, the impact on refis was dramatic. Marry the home, data the rate indeed.

“Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week’s rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance,” MBA VP Joel Kan said Wednesday.

The near 35% jump in refis drove a 17% increase in the MBA’s measure of overall application activity, which hit the highest levels since January of 2023.

So, if you were wondering just how sensitive this market is to any moves in rates, let alone huge moves like the one witnessed earlier this month, there’s your answer.

Meanwhile, Redfin’s Lily Katz gently noted on Wednesday that the average teacher in America can afford just 14.3% of listed homes “within commuting distance of their school.” That figure in 2019 was 39%.