Why the Arlington Heights Real Estate Inventory 2025 Is at Historic Lows: Understanding the Rate-Lock Effect
Written by: Mike Zapart, Real Estate Agent – Compass | Arlington Heights, IL
If you’ve been watching the real estate market in Arlington Heights—or anywhere in the U.S.—you’ve likely noticed fewer homes coming on the market than in previous years. Many homeowners want to move, but feel “stuck.” The biggest reason is something the industry calls the Rate Lock Effect, and it’s shaping today’s market more than anything else.
✅ What Is the Rate Lock Effect?
The Rate Lock Effect occurs when homeowners choose not to sell because they don’t want to give up their current low mortgage rate. Millions of homeowners refinanced or purchased homes when rates were historically low—some locked into mortgage rates under 3%.
Today, moving often means replacing a 2.75%–4% mortgage with a 6.5%–7% one.
In simple terms:
Homeowners feel financially locked into their current home because their existing mortgage is too good to give up.
This reluctance to sell reduces the number of homes on the market—driving competition and pushing prices up.
🏠 Eye-Opening Stats About U.S. Mortgages
To understand how widespread the rate lock effect is, take a look at these national numbers:
- 40% of U.S. homes are owned free and clear — no mortgage at all.
- Of the remaining 60%:
- 70% have mortgage rates below 5%
- Only 18% have rates above 5%
The Federal Housing Finance Agency (FHFA) confirms this:
80.3% of all mortgages in the U.S. have an interest rate of 6% or lower.
• 9.9% between 5% and 6%
• 17.9% between 4% and 5%
• 32.1% between 3% and 4%
• And 20.4% below 3%
When you look at the entire housing pool:
- 40% free and clear
- 42% have rates below 5%
- Only 18% have rates above 5%
No wonder many homeowners say:
“I’d love to move—but not at double the interest rate.”
📉 How This Impacts the Arlington Heights Market
Arlington Heights has been especially impacted.
Right now, we only have 1.1 months of inventory of homes for sale.
What does “months of inventory” mean?
Months of inventory measures how long it would take to sell every home currently on the market if no new homes were listed and buyers continued purchasing at the current pace.
- A balanced market is considered 5–6 months of inventory.
- Arlington Heights at 1.1 months means:
- Extremely low supply
- Homes selling quickly
- Strong competition from buyers
With so few homes available, sellers are in a powerful position—if they decide to list.
🌅 What Could Change in 2026?
Many economists believe that if mortgage rates move back into the 5% range, we’ll see more sellers finally list their properties. That’s when inventory could loosen and the market could shift to a more balanced environment.
2026 could be the year the rate lock effect finally breaks.
👋 Thinking About Moving But Worried About Rates?
There are ways to navigate the current environment:
- Rate buy-down programs (sometimes funded by the seller or builder)
- Bridge loan options through Compass (move first, then sell)
- Equity-driven strategies if downsizing
Every move should make financial sense—and I’m here to help you plan it.
✅ Final Thoughts
The rate lock effect is one of the strongest forces in the real estate market today. It explains why inventory is tight, why homes are selling quickly, and why prices remain strong.
If you’re thinking about moving in the next 12–24 months, now is the time to start planning and evaluating your options.
Mike Zapart
📲 Call or text: 224-715-8778
📩 Email: mikezapart@gmail.com
🌐 Compass – Arlington Heights, IL
When you’re ready, I’ll guide you through every step to make your move simple and profitable.