Goldman Sees Cheap-Mortgage ‘Lock-In’ Freezing US Home Sales Through 2027

Goldman Sachs economists expect the US housing market to remain largely frozen through 2027, forecasting just 3.9 million existing-home sales that year, roughly 26% below 2019 levels, as homeowners holding ultra-cheap mortgages stay put rather than trade up into today’s far costlier rates.

The dynamic, often described as mortgage rate lock-in, stems from the wave of refinancing during 2020 and 2021: more than 95% of American mortgage borrowers currently pay below today’s market rate, and 65% pay at least two percentage points less, making a move financially painful even for homeowners who might otherwise want to relocate or upsize.

Goldman’s strategists expect mortgage rates to ease to around 6.4% by the end of 2027, but the bank’s note cautions that affordability will remain at historically poor levels even with that decline, meaning lower rates alone won’t be enough to meaningfully unfreeze the market.

The forecast points to a widening divide within the millennial generation itself. Homeownership among adults under 35 is far lower than commonly cited figures suggest, just 22% when counting every adult in that age group, compared with 37% when only household heads are counted.

Older millennials, aged 36 to 45, have emerged as the market's highest-earning buyers, with a median household income of $132,700 in 2024, and only about a third of their purchases were first-time buys, with most instead using built-up home equity to move into larger properties.

The combination of a frozen resale market and a widening gap between younger and older millennials suggests the housing lock-in effect isn't just slowing transactions broadly, but is actively reshaping who within a single generation gets to build wealth through homeownership and who gets left further behind.