U.S. home buying and searching outpaced projections in June, blowing past historical averages, despite high mortgage rates.

Mortgages are more expensive today than they’ve been in two decades. As of this writing, the average 30-year fixed-rate is 6.96% and rising. Home prices, too, are historically high – well over $400,000 on average.

However, data from UBS suggests Americans aren’t quite as phased by the high costs of buying homes as analysts previously anticipated.

Searches for both new and existing homes are up—compared to historical averages. And sales activity is declining less than what even optimistic analysts were predicting just recently.

What the Data Says

According to UBS, search activity for new homes increased 10.4% month-over-month (MoM) in June, versus an historical average of just +1.6%.

Searches for existing homes rose 5.4% MoM, against a +3.2% historical average.

Housing search increase graph

Buying and selling activity isn’t exactly rising, but it, too, came in better than analysts expected.

At the beginning of the year, UBS predicted an 8% year-over-year (YoY) drop, and that figure actually “appeared bullish when established in January,” the analysts noted. In fact, YoY home buying in June dropped just 4.6%.

The positive trends hold true across most regions of the country, as well.

Compared to average weekly search activity since 2015, the only two states with declining interest were Georgia (-2%) and Arizona (-0.2%). By contrast, the states with the highest rising interest were South Carolina (+9%), North Carolina (+5%), and Florida (+4%).

Not enough homes

With only 600,000 active listings, the housing market remains in short supply. Compare that with over a million listings at the turn of 2019-20, and nearly 1.5 million in 2016.

Economists speculate that such low inventory is what drives home prices despite rising interest rates. But there are reasons to believe the situation could turn around, albeit slowly.

In its Q2 earnings projections, UBS noted strong financial results from some of the biggest homebuilding corporations in the country, including Lennar Corp. and KB Homes.

Good times for homebuilders should translate to more homes, and more buying.

And Covid, for all of its economic downsides, may evenutally have a positive impact on housing inventory.

As workers move to being partially or fully remote, workspaces across the country are going under- or entirely unused, inspiring some to convert office buildings into apartment buildings.

If June’s home search data tells us anything, it’s that the housing market's future is less certain than we think.