Home buying demand skyrocketed during the pandemic as interest rates collapsed and an influx of Americans started working from home. However, the Fed’s rate hikes have quickly spurred a reversal. Mortgage originations jumped from $2.3 trillion in 2019 to more than $4 trillion in 2020 and 2021, but demand has since plummeted to the lowest level in more than two decades.

“Rates are significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed,” says Joel Kan of the Mortgage Bankers Association. “Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance.”