• Cracker Barrel’s new logo refresh, has sparked major backlash from critics who view it as a loss of tradition and a “woke” move, even briefly wiping nearly $100 million off the company’s market value. While some argue the change erases the brand’s Americana identity and nostalgia, branding experts say the modest update is part of a broader modernization strategy and reflects the tension between preserving tradition and staying relevant.

One Americana brand isn’t getting the barrel-of-monkeys response they were hoping for when launching their new logo this week. 

Cracker Barrel—one of the most iconic restaurant chains in America, deeply rooted in Southern food and hospitality—this week revealed a new look. 

A tweak to the logo removes the man sitting on a chair and leaning on a barrel, and the font appears to have slightly changed. 

Photo courtesy Cracker Barrel

And some people are absolutely outraged, with many going as far to say its new, simplified logo is a signal of Cracker Barrel going woke. 

“Cracker Barrel didn’t just lose its logo. It lost its soul,” wrote an X user called @DesireeAmerica4, whose bio section reads: “Unapologetically America First. Igniting debate. Standing tall for the everyday American.”

“This isn’t modernization. It’s extermination of Americana, of warmth, of memory,” she continued. “Congratulations, Cracker Barrel. You’re now Woke Barrel. Nobody asked for this.”

Cracker Barrel lost nearly $100 million in value in trading on Thursday. The stock slightly rebounded Friday, up about 0.25% in the late afternoon.

Cracker Barrel didn’t immediately respond to Fortune’s request for comment. 

The new logo is all part of CEO Julie Felss Masino’s turnaround plan for the restaurant. She said last year the chain wasn’t “as relevant as we once were,” and announced plans to update its menu and eateries. The new logo is “now rooted even more closely to the iconic barrel shape and word mark that started it all,” according to the company. 

“On the surface, it’s a modest refresh. But when a brand is built on tradition, even a small design change can feel like a cultural shift,” Evan Nierman, founder and CEO at crisis communications firm Red Banyan, told Fortune. “It touched a nerve because it challenged what some customers felt was sacred about Cracker Barrel.”

Is the Cracker Barrel rebrand really that big of a deal?

Cracker Barrel’s rebrand has really struck a chord with some people, particularly those who subscribe to a MAGA-leaning lifestyle. They argue it rids the brand of its deep Southern heritage and that the brand has become too sterile. 

One TikTok user satirically said in regards to the new Cracker Barrel logo: “I don’t want this woke crap. What DEI hire made this logo?”

Steak N’ Shake even chimed in on the logo change and reshared the X post from @DesireeAmerica4 with a comment in a style mimicking President Donald Trump’s Truth Social posts: “Fire the CEO! Thank you for your attention to this matter!” 

While Cracker Barrel “took a stab at modernizing and showing cultural relevance,” Mary Delano, chief marketing officer at ad agency Moosylvania, told Fortune, it lost its old-fashioned identity. 

“This could potentially offend the restaurant’s core fans, who see the chain’s rocking chairs, comfort food and nostalgia as the elements that make Cracker Barrel feel like that home away from home,” said Delano, who’s helped bring iconic brands like Pink Whitney to market.

Although the new logo was “more of a tweak than a total overhaul,” said Tenyse Williams, digital marketing adjunct instructor at George Washington University and the University of Central Florida, it feels bigger because of the political climate we’re in.

“Cracker Barrel is nostalgia for many, especially customers in the South and Midwest who feel ownership and pride over the brand,” Williams told Fortune. “For a brand that hasn’t changed its logo since 1977, even small changes to a symbol so tied to Americana can feel magnified.”

Nierman argued, however, Cracker Barrel’s new logo doesn’t erase its legacy. Rather it softens its image. 

“Cracker Barrel has long leaned into a version of Americana that felt frozen in time,” he said. “This update suggests the brand is finally acknowledging that the world around it is changing, and it wants to be part of that future.”

This story was originally featured on Fortune.com

© Getty Images—Joe Raedle

• Cape Cod, one of the priciest housing markets in the U.S., is considering a 2% real-estate transfer fee on luxury homes above $2 million to fund affordable housing. Similar “mansion taxes” in Los Angeles and Rhode Island show how other expensive markets are turning to surcharges on wealthy homeowners to redistribute housing wealth.

Cape Cod is one of the most expensive housing markets in the U.S. While the median home price in the beachy region of Massachusetts is about $600,000, waterfront properties and homes in exclusive areas often exceed $1 million, according to Warren Buffett’s Berkshire Hathaway Home Services.

And luxury homes in the region might get even more costly as Cape Cod lawmakers consider a tax on wealthy homeowners. The proposal, currently before the Barnstable County Assembly of Delegates, would tack on an extra 2% surcharge on luxury-home sales above $2 million.

The goal of the proposed real-estate transfer fee is to generate up to $56 million per year for affordable and year-round housing to make Cape Cod a place where “working families, seniors, and young people can afford to live,” according to the Falmouth Democratic Town Committee.

Since housing is so expensive on the Cape, the majority of homeowners there include affluent second-home buyers, pre-retirement couples, high-paid remote and hybrid workers, and investors, according to Massachusetts-based real-estate firm Guthrie Shofield Group. 

“We’ve always been a place where the wealthy or affluent come to vacation and when they come to vacation, it’s typically service-based employees and that workforce waiting on them,” Alisa Magnotta, CEO of Hyannis, Mass.-based Housing Assistance, said in a statement.

Indeed, homeowners for a majority of the towns on Cape Cod need to make about $200,000 to $300,000 or more per year to afford to buy a home there, according to Housing Assistance. Meanwhile, Cape Cod workers’ wages are much lower when compared to the rest of the state: While the median household income in Massachusetts is about $101,000, according to Housing Assistance, the median income in many Cape towns is just about $70,000 to $80,000.

“A transfer fee is not a tax on regular people—it’s a way to reallocate some of the wealth from second or third home buyers to support the people who make this community what it is,” Ella Sampou, a community organizer with the Lower Cape Community Development Partnership, said in a statement.

Therefore, the property exchange fee could help build for the “missing middle,” or a range of housing options like duplexes, townhomes, or apartment complexes that are often more affordable than single-family homes for the average wage earner.

Other expensive cities with extra real-estate taxes

Cape Cod isn’t the first expensive housing market to introduce an extra real-estate tax on the wealthy. Similarly, the so-called “mansion tax” in Los Angeles tacks on an additional 4% tax to property sales of at least $5 million and a 5.5% tax for $10 million-plus properties. 

The cost of the tax is typically paid by the seller, and is something separate from a home’s sales price, but can be a “massive amount of money,” Selling Sunset star and Oppenheim Group agent Emma Hernan previously told Fortune. On the flipside of the argument about a real-estate tax on luxury properties, Hernan also described it as a “nightmare” for both sellers and agents. 

In LA, for example, someone selling a $5 million home would have to pay an extra $200,000 they “didn’t really factor in when they bought the home because the mansion tax wasn’t in play,” Hernan said.

There’s also a mansion tax in Rhode Island targeting luxury second homes and non-owner-occupied properties. It’s commonly referred to as the “Taylor Swift Tax” since the pop star owns a $17 million mansion there. 

Beginning next year, Rhode Island will slap a surcharge on vacation homes in the state that are worth at least $1 million. Mansion owners will have to pay $2.50 for every $500 of assessed value above the first million. For Swift, that would be an extra $136,000 in property taxes. (A Cape Cod home previously owned by Swift just recently went up for sale for $14.5 million). 

This story was originally featured on Fortune.com

© John Greim/LightRocket

• Many Gen Zers frequently indulge in “treat culture,” rewarding themselves with small purchases like snacks or conveniences as a form of self-care, coping, and positive reinforcement. While these little luxuries offer comfort and are often justified as necessities, nearly 60% of Gen Z admit it leads to overspending. Treat culture isn’t unique to Gen Z, but this generation has mainstreamed it to a daily practice.

Getting out of bed to go to work or lugging yourself to the grocery store can feel tough. And for that, you deserve a little treat. 

At least that’s the way many Gen Zers see it. Despite a lack of income, Gen Z finds ways to reward themselves frequently: 57% buy themselves a small treat at least once a week, according to a Bank of America report from late July. This could be good news for retailers like Starbucks and Dunkin’, since coffee and other beverages are popular and relatively low-cost treats. Trader Joe’s could also benefit from this trend since they’re known for unique food and beverages, as well as Sephora and Ulta as self-care and cosmetics become increasingly popular among younger generations.

But for nearly 60% of Gen Zers, this leads to overspending, “making little treats a slippery slope,” according to the report. Yet, the generation has shared in droves on social media about the little ways they’re treating themselves, whether it’s buying a simple ice cream cone or splurging on a new clothing haul. 

Gen Zers reward themselves for small wins, but also use little treats as pick-me-ups after a bad day. And some don’t even really have a reason.

“Buying myself a little treat because today would’ve been my birthday if I was born today,” one TikTok user recently posted.

@hellodaydrinkers

And it’s important to remember that 💙 #fyp #fypage #greenvillesc #daydrinkers #localcoffee #cutecoffeeshop #trend #littletreat

♬ original sound – Theo

Terran Fielder, a 23-year-old media specialist, told Fortune she treats herself to lunch during the day and that many of her small indulgences have to do with making her life easier or more time to rest when the day is over.

“When I treat myself, it’s usually in ways that give me more shut eye,” she said. “So, if I am not making lunch, that’s another 20 minutes in bed in the morning. It feels like I’m not just spending money: I’m investing in my well-being.” She said she estimates she spends about $200 to $250 per month on treating herself.

To be sure, Gen Z isn’t the first generation—and likely isn’t the last—to participate in treat culture. Most recently, older generations scorned millennials for their proclivity toward treating themselves with avocado toast and a daily Starbucks coffee, arguing they could’ve saved or invested that money instead. 

While treat culture isn’t new, Gen Z is taking it to a “new level,” Daniel Levine, director of consumer trends consulting firm Avant Guide Institute, told Fortune.

“While members of the Silent Generation treated themselves to a new dress for a special occasion, and baby boomers splurged on a new car or a vacation after reaching a career milestone, Gen X indulges in late-night runs for their favorite junk food to de-stress,” Levine said. “The low barrier to entry makes it a daily habit.”

Meanwhile, online shopping as well as food delivery have made it easier to indulge in treats. Indeed, Gen Z uses grocery subscriptions 133% more often than Gen X, according to a 2024 PYMNTS survey of more than 67,000 consumers across 11 countries accounting for nearly half the world’s GDP.

Why treat culture exists

Part of treat culture goes back to the basic psychological concept of positive reinforcement. When you do something positive or are trying to reinforce habits, earning a treat or reward can help cement that behavior. 

Treat culture, for younger generations, also serves as a coping mechanism or a form of resistance to societal pressures and stressors, Jillian Amodio, a licensed master social worker at Waypoint Wellness Center, told Fortune. That’s because Gen Z has come of age during a time of economic instability, a global pandemic, climate anxiety and widespread social upheaval, she said. Meanwhile, some younger generations have experienced career whiplash from working in an office, then working remotely during the pandemic, then being forced back to in-person during the past few years.  

“Small, intentional joys become a way of reclaiming agency and grounding oneself in the present,” Amodio said. “Pair that with the influence of social media, where trends, aesthetics, and ‘little luxuries’ are celebrated and shared widely, and we have the perfect conditions for treat culture to thrive in the spotlight.”

A recent study by Intuit Credit Karma also showed Gen Z justifies certain non-essential purchases like streaming services, skincare, meals out, fitness classes, and more as “necessities” rather than discretionary purchases. Indeed, more than half of Gen Z views spending on hobbies and interests as a necessity, not a luxury, and they’re putting them above other financial goals.

“If I’m working away from home, buying lunch instead of packing it feels like a small luxury that makes my day easier,” Fielder said. “When things get really busy, I’ll skip the store altogether and order things online, just to avoid another errand.”

This story was originally featured on Fortune.com

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• Home buyers are paying more for smaller homes, a phenomenon called shrinkflation. A new LendingTree study found new single-family homes have shrunk 11% in the past decade, while their price per square foot has jumped 74%. Driven by surging land, labor, and material costs (compounded by tariffs and worker shortages), builders are trimming square footage and eliminating wasted space like hallways.

Just like how serving sizes at restaurants feel smaller, yet more expensive, a similar phenomenon has hit the housing market. Shrinkflation—essentially getting less for more—is plaguing nearly every housing market region in the U.S.

A study published Aug. 11 from LendingTree shows new homes are 11% smaller yet 74% more expensive per square foot in the past decade. The average size of a new single-family home dropped from 2,707 square feet in 2014 to 2,404 square feet in 2024, according to the report. And over that decade span, the average price per square foot for a new single-family home jumped from $97.25 to $168.86.

Housing shrinkflation isn’t a new concept, but it’s becoming more evident as both new- and existing-home prices remain elevated.

Miles Alexander III, principal at real-estate development and investment firm Alexander Goshen, told Fortune housing shrinkflation is the result of a “perfect storm” from land, labor, and material prices surging. 

“To keep projects viable, builders are trimming square footage but maintaining price points,” Alexander said. “It’s not that we want to deliver less space, it’s that the economics demand it.”

Housing materials costs have been on the rise since the pandemic, but a recent study from Evernest, a property-management and real-estate brokerage services firm, shows President Donald Trump’s tariffs have already added more than $100,000 to the cost of a new home in at least one state. Many other states have also seen prices rise by tens of thousands of dollars, according to the study, due to tariffs on materials like imported steel, copper, drywall, and lumber. 

There is also a major construction-worker shortage. The Associated Builders and Contractors (ABC) reported the construction industry needs to attract nearly half a million workers this year and next to meet demand for services. 

Jake Kennedy, a licensed real-estate agent with Compass in Tennessee, said housing shrinkflation isn’t just about giving buyers less—it’s about builders finding new ways to keep construction affordable.

“It’s the basic economics that happen when land, labor, and lumber all cost more, square footage is where the cuts get made,” Kennedy told Fortune. “Yes, new homes might be smaller, but the rising costs are being absorbed by fewer square feet, resulting in the on-paper appearance of houses being more expensive.”

Smaller homes force creativity

Smaller footprints and more expensive resources have “forced creativity” for developers, Alexander said. This means designing homes with pocket offices, multifunctional living areas, and layouts that maximize every inch. Plus, hallways are disappearing, he said. 

John Burns Research & Consulting also warned last year about the “death of the hallway” in new-home construction. “All that Tetris we played in the ‘90s has finally paid off. Instead of shrinking rooms to reduce overall home size, a common tactic among our architectural designers was to eliminate unnecessary circulation space,” JBREC wrote in its 2024 US Residential Architecture and Design Survey report. 

“Essentially, we’re Tetris-ing the functional rooms together, avoiding wasted square footage on non-functional areas like hallways.” 

Kennedy said he’s also seen builders essentially create smaller versions of the homes they were building before the pandemic. Bedrooms that might’ve been 12 feet by 15 are now closer to 10 feet by 12 feet. 

“Add that up in a two-story house with four bedrooms and it’s easy to see how a 2,500-square-foot house is becoming 2,000 square feet,” he said.

Different demands

Developers and real-estate experts also say younger generations have different needs and demands when it comes to housing. Millennials and Gen Zers, as well as other first-time homebuyers, “aren’t chasing the big suburban mansion,” Alexander said. 

“They’re more cost conscious, and they actually prefer compact layouts that are easier to maintain and more affordable,” he said. 

Elyse Sarnecky, marketing director with Marketplace Homes, told Fortune because affordability has become the chief concern for new buyers during the past year or so, many are willing to forgo extras or upgrades they would’ve wanted in new-home construction. And to be sure, new homes still remain spacious by historical standards, according to the LendingTree report: The average size of a new single-family home rose from 2,050 square feet in 1994 to 2,404 in 2024.

Sarnecky said most of her company’s new-construction buyers are more concerned with getting the best possible home they can get within their budget, she added.

“The actual floor plan of the home is really important as well when considering this. It has to work for their family,” Sarnecky said. “As long as it does, size is less of a factor.”

This story was originally featured on Fortune.com

© Getty Images—Allen J. Schaben / Los Angeles Times

• The AI talent war among major tech companies is escalating, with firms like Meta offering extravagant $100 million signing bonuses to attract top researchers from competitors like OpenAI. But HelloSky has emerged to diversify the recruitment pool, using AI-driven data to map candidates’ real-world impact and uncover hidden talent beyond traditional Silicon Valley networks.

As AI becomes more ubiquitous, the need for the top-tier talent at tech firms becomes even more important—and it’s starting a war among Big Tech, which is simultaneously churning through layoffs and poaching people from each other with eye-popping pay packages. Meta, for example, is dishing out $100 million signing bonuses to woo top OpenAI researchers. Others are scrambling to retain staff with massive bonuses and noncompete agreements.

With such a seemingly small pool of researchers with the savvy to usher in new waves of AI developments, it’s no wonder salaries have gotten so high. That’s why one tech executive said companies will need to stop “recycling” candidates from the same old Silicon Valley and Big Tech talent pools to make innovation happen.

“There’s different biases and filters about people’s pedigree or where they came from. But if you could truly map all of that and just give credit for some people that maybe went through alternate pathways [then you can] truly stack rank,” Alex Bates, founder and CEO of AI executive recruiting platform HelloSky, told Fortune.

(In April, HelloSky announced the close of a $5.5 million oversubscribed seed round from investors like Caldwell Partners, Karmel Capital, True, Hunt Scanlon Ventures as well as prominent angel investors from Google and Cisco Systems). 

That’s why Bates developed HelloSky, which consolidates candidate, company, talent, investor, and assessment data into a single GenAI-powered platform to help companies find candidates they might not have otherwise. 

Many tech companies pull from previous job descriptions and resume submissions to poach top talent, explained Bates, who also authored Augmented Mind about the relationship between humans and AI. Meta CEO Mark Zuckerberg even reportedly maintains a literal list of all the top talent he wants to poach for his Superintelligence Labs and has been heavily involved in his own company’s recruiting strategies.

But the AI talent wars will make it more difficult than ever to fill seats with experienced candidates.

Even OpenAI CEO Sam Altman recently lamented about how few candidates AI-focused companies have to pull from.

“The bet, the hope is they know how to discover the remaining ideas to get to superintelligence—that there are going to be a handful of algorithmic ideas and, you know, medium-sized handful of people who can figure them out,” Altman recently told CNBC. 

The ‘moneyball’ for finding top talent

Bates refers to his platform as “moneyball” for unearthing top talent—essentially a “complete map” of real domain experts who may not be well-networked in Silicon Valley. 

Using AI, HelloSky can tag different candidates, map connections, and find people who may not have as much of a social media or job board presence, but have the necessary experience to succeed in high-level jobs. 

The platform scours not just resumes, but actual code contributions, peer-reviewed research, and even trending open-source projects, prioritizing measurable impact over flashy degrees. That way, companies can find candidates who have demonstrated outsized results in small, scrappy teams or other niche communities, similar to how the Oakland A’s Billy Beane joined forces with Ivy League grad Peter Brand to reinvent traditional baseball scouting, which was depicted in the book and movie Moneyball.

It’s a “big unlock for everything from hiring people, partnering, acquiring whatever, just everyone interested in this space,” Bates said. “There’s a lot of hidden talent globally.”

HelloSky can also sense when certain candidates “embellish” their experience on job platforms or fill in the gaps for people whose online presence is sparse. 

“Maybe they said they had a billion-dollar IPO, but [really] they left two years before the IPO. We can surface that,” Bates said. “But also we can give credit to people that maybe didn’t brag sufficiently.” This helps companies find their “diamond in the rough,” he added. 

Bates also predicts search firms and internal recruiters will start forcing assessments more on candidates to ensure they’re the right fit for the job. 

“If you can really target well and not waste so much time talking to the wrong people, then you can go much deeper into these next-gen behavioral assessment frameworks,” he said. “I think that’ll be the wave of the future.”

This story was originally featured on Fortune.com

© Photo courtesy HelloSky

• Chili’s has seen a major comeback, reporting a 24% sales jump and 16% increase in traffic this quarter, driven by creative marketing and a focus on value Under CEO Kevin Hochman and CMO George Felix, the brand has tapped into nostalgia, viral social-media moments, and playful stunts while tripling its marketing budget over three years.

“Chili’s is officially back, baby back,” Brinker CEO Kevin Hochman said in the company’s fourth-quarter earnings report released Wednesday, a nod at the beloved casual-dining chain’s iconic jingle from the 1990s.

Chili’s has been winning at fast-casual dining this year while competitors have stifled due to tariffs and changing dining habits. The brand has made itself brutally efficient and has reigned supreme in the value-meal wars. And it’s been a viral sensation on social media for its quirky marketing campaigns and epic cheesepulls. 

“Chili’s has always had a history of really having fun with advertising and trying to be in the zeitgeist or pop culture,” Hochman told Fortune. “We don’t take ourselves too seriously. You can be silly about the burger because at the end of the day, we’re just selling burgers and booze.”

Not only has Chili’s been the proverbial talk of the town, but it has the hard data to show for its success: The chain reported a 24% spike in sales and 16% jump in traffic this quarter. 

Much of the boost in enthusiasm for and business to the chain has stemmed from its recent marketing campaigns. During the past three years, Chili’s increased its marketing budget by $105 million; in 2022, it had just $32 million allocated, but its 2025 marketing budget is a whopping $137 million, according to Hochman. AdAge crowned Chili’s on its 2025 list of Creativity Award winners. 

Winning marketing campaigns

Hochman regularly credits Chili’s CMO George Felix with the brand’s renewed success. Felix previously served as CMO of Tinder and Pizza Hut and as director of marketing and director of brand communications for KFC, where he breathed new life into the brand’s emblematic mascot through the “Return of Colonel Sanders” campaign.

Felix is implementing a similar playbook at Chili’s, using nostalgia to attract customers. One example was the opening of a Chili’s restaurant in Scranton, Penn., a nod to The Office episode where character Pam Beesly exclaims, “I feel God in this Chili’s tonight.”

Photo courtesy Chili’s

“For decades, Chili’s has inserted itself in culture—introducing the now-famous Baby Back Ribs jingle, and most recently unleashing Triple Dipper cheese pulls on TikTok,” Felix said in a statement. “But we’ve also seen the brand come to life on screen through the years, and that includes being tied to Scranton despite never having a location there. That changes this year.”

Felix told Marketing Dive that while Chili’s attracts customers in a variety of ways, the marketing push behind its Scranton restaurant leaned toward a “millennial, nostalgic audience.”

“That was certainly a nostalgia play, but the interesting part about that is, there’s all of us that watched it when it was on, and now it’s had this whole resurgence… that really expands generations,” he said. “It started as a nostalgia play, but I think it also resonates with the younger audience in a fun way.”

Chili’s has gotten creative in other ways, like releasing a Triple Dipper-inspired bedding set and Tecovas cowboy boots made from its archetypal red leather booths. 

Photo courtesy Chili’s

Meanwhile, TikTok and other social-media platforms have been flooded with videos of cheese pulls from the mozzarella sticks as part of the Triple Dipper appetizer platter and Chili’s own social-media team leans into absurdity and humor with many of its own posts. 

In one of its most recent Instagram posts, Chili’s inserted itself into the lore of the upcoming Taylor Swift album posting a close-up photo of a rib likening it to the new album cover.

View this post on Instagram

A post shared by Chili's Grill & Bar (@chilis)

Hochman even recounted a time where their social-media team saw a couple wanted to cater their wedding with Chili’s, which inspired the precedent of the chain offering free catering to any couple who gets engaged in their restaurants. 

“These are just cool things that a brand that is fun and doesn’t take themselves too seriously are going to lean into,” Hochman told Fortune. “I do think that guests appreciate that, because at the end of the day, they know we’re not corporate stiff types, that we’re just kind of like them. We just want to have fun, and we want them to see that.”

This story was originally featured on Fortune.com

© Getty Images—Bloomberg

• Mortgage rates are currently in the high 6% range, and a drop back to the pandemic-era sub-3% levels is considered unrealistic by economists. However, a modest decline in rates to below 6% could motivate some homeowners to sell, potentially thawing the frozen housing market constrained by homeowners holding onto low-rate mortgages.

If you’re waiting for mortgage rates to fall to around 3% to buy a home, don’t hold your breath. The likelihood mortgage rates will drop anywhere near those pandemic-era levels is “unrealistic,” a Zillow economist recently said.

But not all hope is lost on the U.S. housing market, at least according to one economist. Bob Schwartz, a senior economist with Oxford Economics, told Fortune while there’s “no quantifiable rate” that would trigger more home sales, just a 1% drop in mortgage rates to lower than 6% should be “enough of an incentive” for at least some current homeowners to sell their homes and “trade up.”

One of the prime factors keeping the U.S. housing market frozen is mortgage rates. During the pandemic, buyers locked in at a sub-3% mortgage rate. But now that mortgage rates are hovering between 6% and 7%, current homeowners have little incentive to sell their current homes and either “trade up,” as Schwartz puts it, or downsize. New buyers are also resistant to higher mortgage rates than they’ve witnessed in recent memory. 

In fact, the percentage of mortgages outstanding with a rate higher than 6% has more than doubled since 2021, according to Schwartz, but that figure is still less than 20%. More than 50% of outstanding mortgages have rates in the 3% to 4% range. 

While Schwartz told Fortune mortgage rates would have to “drop significantly” from the current 6.63% to move the masses of homeowners off the sidelines and put their homes up for sale, a smaller drop could encourage enough people to do so.

“The housing market would be the biggest beneficiary of lower rates as they would unlock frozen sales by homeowners who are reluctant to give up the low-rate mortgages taken out in the decade following the Great Recession,” Schwartz wrote in an Aug. 8 note. 

Other recent reports have also illustrated how little faith there is in mortgage rates dropping to pandemic-era levels and how other housing market factors play into housing affordability concerns in the U.S. A recent Zillow report showed a 0% mortgage rate in some U.S. cities wouldn’t be enough to make housing affordable because home prices still remain too high; they’re up more than 50% since the start of the pandemic.

High home prices “are the bigger hurdle,” Michelle Griffith, a luxury real-estate broker with Douglas Elliman, based in New York City, previously told Fortune.

“Inventory is tight and competition is high, so the cost of the property itself is what keeps most buyers on the sidelines,” Griffin said.

Refinancing and future mortgage predictions

While a drop in mortgage rates could encourage outright sales, Schwartz told Fortune another likely scenario would be current homeowners refinancing to a lower rate. Although that may not thaw the frozen housing market as much as Americans may hope, it could be good for the economy in other ways. 

“A significant increase in refis could have a significant impact on spending, particularly if a good chunk is of the cash-out variety,” Schwartz said. “Homeowners are sitting on $34.5 trillion of housing equity, which could be tapped into for spending purposes.”

To be sure, mortgage rates would have to “fall pretty drastically” for that to happen, which Oxford Economist doesn’t see in their outlook at this point, he added. 

In relation to mortgage rates, all eyes have been on the Federal Reserve’s upcoming Federal Open Market Committee (FOMC) meeting in September that will determine interest rates. On Tuesday, the Consumer Price Index summary reported inflation notched up just 0.2% in July, bringing headline inflation to 2.7%, better than many expected. Still, it’s ahead of the Fed’s 2% target. 

While the CPI report had little impact on the 10-year Treasury rate, which is the benchmark for mortgage rates, it shouldn’t prevent the Fed from cutting rates in September, Schwartz said. 

“Although with inflation still sticky and well above the Fed’s 2 % target … we still believe the Fed will wait until December to cut,” he added. “However, if the upcoming jobs report for August is a dud, similar to the July one, odds are the Fed will cut in September.”

This story was originally featured on Fortune.com

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