If not low mortgage rates, what will unlock the housing market? 

Compass Chief Economist Mike Simonsen used his first major public-facing housing outlook webinar since joining the brokerage last summer to sketch what he calls the "next era" of the housing market — one defined less by runaway appreciation and more by stabilizing inventory, modest sales growth and slowly improving affordability.

Simonsen was hired in July 2025 as Compass' first-ever chief economist. The move signaled the brokerage's push to invest more heavily in data and market intelligence months before its blockbuster acquisition of Anywhere Real Estate significantly expanded the company's national footprint and overall agent count. 

In addition to the data and trends Simonsen highlighted in his Feb. 18 broadcast, he spoke with Real Estate News about how the mortgage rate "lock-in" effect is changing, why hiring may be the real unlock for mobility and what's behind tight conditions in Midwestern markets.

The mortgage rate lock-in effect is fading — slowly

Over the past few years, one of the dominant industry narratives has centered on homeowners being "locked in" to sub-3% mortgage rates, effectively freezing inventory. Though Simonsen did not dismiss the ongoing impact of this trend, he argued that its influence is gradually easing.

"We're four years post-mortgage rate lock-in," he said. "There are now more people with mortgages over 6% than under 3%."

That shift marks a subtle but important turning point. As more recent buyers enter the market at 6% rates or higher and record-low pandemic-era loans age, the math behind the lock-in story is slowly changing. Each day, the share of homeowners who would face a dramatic payment spike by moving gets a little smaller.

The lock-in effect "is still a factor and will be a factor for many years," Simonsen said. "But each day it fades a little bit." 

The implication is straightforward: Today's constrained inventory may be less about Federal Reserve policy and borrowing rates and more about broader economic confidence.

Hiring — not rates — may be the real unlock

Throughout his webinar and during the subsequent conversation with Real Estate News, Simonsen repeatedly pointed to hiring rates as the macro indicator he's watching closest in 2026.

Unemployment remains low, but hiring has slowed to levels typically associated with recessionary periods — even though the broader economy has avoided a formal downturn. That dynamic has created what Simonsen calls the "Great Stay," where homeowners are holding onto both their jobs and their homes because they lack confidence about securing employment elsewhere.

"If I have a job I don't want to leave, and I have a mortgage I don't want to leave, even though I'd like to move to Phoenix or Denver, I'm worried about getting a job," he said.

This reframes the inventory conversation in a meaningful way. Tight supply in many markets is not solely the result of homeowners holding onto their sub-3% mortgages — it's also a function of stalled labor mobility. If hiring were to meaningfully accelerate, Simonsen suggests that could unlock both listings and transaction volume, particularly along the long-running Rust Belt-to-Sun Belt migration corridor.

Until then, mobility remains constrained even as affordability modestly improves with mortgage rates hovering in the low 6% range.

Midwest tightness reflects migration stall — not a boom

One of the most striking visuals in Simonsen's presentation was a pronounced regional divide, with the Midwest and Northeast showing compressed days on market while much of the Sun Belt sees longer marketing times and softer price momentum.

Chicago and Milwaukee stand out as particularly inventory-constrained markets, but Simonsen cautioned against interpreting that as evidence of a sudden economic surge. Over the long term, Chicago experienced relatively soft population growth and outward migration — particularly during the pandemic — which historically kept home price appreciation muted and inventory more balanced.

The dynamic has shifted not because of explosive inbound growth but because outbound migration has slowed.

"The move-outs to create more inventory are not underway," Simonsen said. Internal household formation — as is seen when young families move from city to suburb — continues. But sellers who might have relocated farther away are listing less frequently.

The result is tighter suburban inventory and renewed price pressure in markets that did not experience the pandemic-era boom-and-bust cycle seen in parts of the Sun Belt. Meanwhile, many Sun Belt markets that absorbed years of migration and new construction are working through elevated inventory and decelerating price growth.

While Simonsen said he reviews Compass' internal buyer demand data alongside broader national housing metrics, he emphasized that his forecasts reflect the entire U.S. market rather than the brokerage's business. The company's platform tracks how many buyers are actively monitoring homes in specific price ranges and markets, which he said provides a real-time demand indicator to watch as 2026 unfolds.

Simonsen's base case for 2026 remains measured at roughly 5% sales growth and flat to slightly positive home prices nationally.