New Mexico’s housing market is experiencing a trend seen across the country. Many homeowners do not want to sell because they have low-rate mortgages of 2% to 3%. Selling would mean buying a new home at much higher rates. This “mortgage lock-in” keeps the number of homes for sale low, which limits choices for buyers and helps keep prices high, even though homes are less affordable.

Economists say mortgage lock-in happens when homeowners are discouraged from moving because they would have to take on a new mortgage at a higher rate. Research from the Federal Reserve Bank of Philadelphia shows that this can lead people to move less often and to fewer homes for sale, tightening supply and pushing prices up.

Key Facts for New Mexico Homebuyers:

• The number of homes for resale remains low when owners keep their low-rate mortgages rather than putting their homes on the market.
• New Mexico is still one of the least affordable states for homebuyers. In 2024, the median listing price was $392,571, and only a small number of homes were affordable for people earning the median income. In 2025, the median home price in Albuquerque is $360,000, and in Santa Fe, it is $675,000. Homes also tend to stay on the market longer across the state.
• Homeowners who locked in 2% to 3% mortgage rates during 2020 and 2021 are understandably reluctant to move and give that up, Rocket Mortgage executive Bill Banfield said.

What “lock-in” means for New Mexico buyers

In practice, lock-in makes it harder for buyers, especially first-time buyers, because fewer homeowners are selling and moving up. With fewer homes for sale, buyers have to compete for fewer listings. This can keep prices higher than expected, even as borrowing costs rise.

Pew’s reporting shows that New Mexico’s housing shortage has deeper roots than today’s high rates alone. Rules and processes have limited homebuilding for years, resulting in fewer homes available for sale. This makes the lock-in effect even more important. When fewer people move, there is even less flexibility in the market.

Why the market doesn’t “unlock” quickly

To see real improvement, the market usually needs one or more of the following changes:

• Lower mortgage rates, which would reduce the difference between what current owners pay and what new buyers would pay;
• More new homes are being built, especially those that are affordable for first-time buyers, or
• Life events, such as job changes, growing families, or retirement, can prompt people to move even when the financial situation is not ideal.

The Philadelphia Fed says lock-in is mainly about incentives. When it costs a lot to get a new mortgage, many people wait to move, which means fewer home sales and listings.

The bottom line

In New Mexico, where there have often been too few homes for sale, mortgage lock-in can make the shortage even worse. This keeps the market tough for buyers, especially those who do not already own a home, until rates drop, more homes are built, or both.