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Ever since the Pandemic Housing Boom fizzled out, mortgage rates spiked, and switching costs/affordability got out of whack, the U.S. housing market has been stuck in a mortgage recession. We’re now roughly four years into it. The latest jump in long-term yields and mortgage rates has only deepened it. After bottoming out at 5.99% in February, the average 30-year fixed mortgage rate climbed to 7.61% on October 5 during the latest run-up, according to Mortgage News Daily. It has since eased a tad to 7.35% on Wednesday, but that’s still well above where it stood earlier this year. That rate shock is landing on a housing market that already had strained resale turnover. As ResiClub reported earlier this month, September marked four straight years of “historically low” resale turnover, with U.S. existing-home sales bouncing along the “Ds of Housing” transaction floor: Existing-home sales that still happen out of necessity due to life events such as death, divorce, disability, and other circumstances that force households to move. Now, the latest rate run-up is pushing existing-home turnover even further up against that floor, and it continues to show up in mortgage application data.

Purchase applications slide back toward fall 2023 lows

The Mortgage Bankers Association’s seasonally adjusted Mortgage Purchase Application Index fell to 134.1 for the week ending October 23, 2026. That’s deep in what ResiClub calls the “historically soft” range (the historical 25th percentile or lower). It’s also down from the roughly 150 to 190 range the index bounced around in through 2025 and much of 2026. It’s now getting closer to where it was back in fall 2023, when the average 30-year fixed mortgage rate was nearing 8.00%. That comparison stands out. Mortgage rates today, at 7.35%, are still below the fall 2023 peak, yet purchase activity has nearly retraced to those lows.

Because purchase applications tend to lead closed sales by a few months, this apps softening tells us resale turnover will press even harder against the Ds of Housing floor through the nationally aggregated seasonally soft window we’re passing through in the final months of the year.

Refinance activity has been rolling back over since February

Every time the average 30-year fixed mortgage rate gets close to 6.00%, we see a little buzz in refinance activity. As soon as it drifts back toward 6.50%, that activity blows back off. As ResiClub explained in August, the reason is that around 6.00%, a chunk of recent vintages (mortgages taken out in late 2022, 2023, 2024, and 2025) jump at the opportunity to refi and get at least a little payment relief. According to an Urban Institute analysis provided to ResiClub, 11.5% of outstanding mortgages were in the “refinanceable” zone in February 2026, when the average 30-year fixed mortgage rate was hovering around 6.00%. That means the prevailing market rate was at least 50 basis points below the borrower’s existing note rate. By August 2026, with rates drifting back toward 6.50%, just 4.6% of mortgages were in that zone. With rates having since climbed as high as 7.61% and still sitting at 7.35%, most of those recent vintages are now even further out of the money.

You can see that play out in the Mortgage Bankers Association’s seasonally adjusted Mortgage Refinance Index. Back in February 2026, the index popped back to a “historically normal level” for the first time since March 2022. Once rates moved back toward 6.50%, it slipped back to a “historically soft level.” Following the latest run-up, it has rolled back over further, falling to 517 for the week ending October 23.

That suppressed activity environment is also showing up on mortgage company payrolls and balance sheets.

Below are some recent mortgage industry layoffs, exits, and mergers (many of which are spurred by the prolonged low-volume environment) tracked by The Truth About Mortgage, which has been tracking mortgage layoffs since 2007:

When origination volume stays depressed for years rather than months, scale matters more. Some lenders exit, some cut, and others sell or merge rather than wait out the downturn for a rate-driven rebound.

Big picture: Most economic models don’t expect a significant short-term decline (greater than 150 bps) in mortgage rates unless something material shifts in the economy, such as a spike in the unemployment rate. Without a bigger downward shift in mortgage rates and long-term yields, the mortgage recession is likely to remain a slow, long grind: low resale turnover pressing against the Ds of Housing floor, refi activity that only flickers when rates dip toward 6.00%, and continued consolidation across the mortgage industry. The housing market continues to be in a period of recalibration.

Stylecraft Builders’ volume has more than doubled since 2014.

Stylecraft is concentrated in Central Texas, one of the regions where the post-boom cyclical cooling has hit hardest. How are they working through affordability pressures?

Doug will discuss how private homebuilders are navigating this cycle and continuing to attract homebuyers. Most private builders don’t have the balance sheets of the big publics—so how are they competing right now on incentives/pricing and attracting buyers?

📍 New York City
🗓️ Friday, November 6th

ResiClub members can read our full report on PulteGroup’s latest earnings and commentary here.