The housing market is set on “pause,” patiently watching and waiting. The all-time jump in mortgage rates hit hard last May, up more than two percentage points to the mid-fives. That was followed by a brief, two-point pile-on to 7% and subsequent wobbles down into the sixes by early summer, where we remain. Yet premier properties can still draw competing offers.

This pause is as unusual as the whole pandemic-Ukraine-inflation event. In any cycle of Fed rate hikes, housing suffers first. But in this one, households are so well-qualifed for their existing loans that we don’t see distressed sales or an increase in inventory for sale. National active listing inventory is up 65% from last winter but is barely half of pre-pandemic normal. Layoffs and unemployment are always the last to be impacted by Fed actions, but a year after the Fed’s first hikes, there is still no increase at all in unemployment.

There is a chance that inflation will come down. If mortgages then drop back to 5%, housing will activate.

If inflation continues to rise, the Fed will continue to hike rates, but even rapid hikes take time to have an effect. The prime rate will soon pass 8%, driving many home equity lines of credit to 9% or higher. That will suppress borrowing for new spending on things like home improvements, and households carrying balances will eventually feel the pinch.

The Fed is steadfast in its view that the labor market is too tight, and will not relent until unemployment rises. Meantime, the good news: a resilient housing market is patiently sitting this one out, resting up for its next run.

Commentary by Louis S. Barnes on business and other trends have appeared periodically in Boulder Reporter. Lou’s Friday reports as Boulder’s credit-market oracle are e-mailed every Friday, written in the voice of a bond trader overdue for his martini: no fluff, no blue-sky predictions, afflicting partisans of all affiliations. Learn more about Lou at Cherry Creek Mortgage.