In fact, only 9 percent of all existing mortgages in the U.S. have rates higher than 6 percent, according to data from the Federal Housing Finance Agency and an analysis by Torsten Slok, chief economist at Apollo Global Management.

Slok adds that about a quarter of mortgages-23 percent-have rates below 3 percent, and 38 percent of homeowners have mortgages with rates between 3 and 4 percent.

In other words, the vast majority of U.S. homeowners have lower mortgage rates.

During the pandemic, millions of homeowners took advantage of ultra-low rates to lower their monthly payments. A recent study by the New York Fed found that 14 million outstanding mortgages were refinanced during the pandemic. The typical homeowner who refinanced during that period saw their monthly payment drop by $220, the Fed said.

But today's homebuyers face a much more expensive path to homeownership: 30-year mortgage rates averaged 6.96 percent as of July 13, according to Freddie Mac.

Today, a typical new homeowner would join the small group of people who have home loans with rates higher than 6 percent.

But with millions of homeowners still holding such low interest rates, it creates one of the big problems freezing the real estate market - a lack of supply. This is because they are reluctant to sell.

If a homeowner sells their home and buys another property, they will have to apply for a home loan at 7 percent or even higher if they need to apply for another mortgage, depending on what their lender offers them.

"The bottom line is that homeowners across America have no incentive whatsoever to move and apply for a new mortgage," Slok said.

This is a key reason for the continued low supply in the housing market," he added.

The imbalance between current interest rates and the lower rates available to most homeowners is severely constraining the supply of new homes. According to Realtor.com, new listings in early July - a measure of how many sellers have listed their homes for sale - were down 27 percent compared to a year ago.

Realtor.com also noted that 82 percent of people looking to buy or sell a home feel "locked in" by low mortgage rates.

As a result, Realtor.com says more than half of sellers are waiting for rates to drop before making a move.

Younger homeowners are especially feeling stuck because they have more mortgage debt to pay off than older homeowners who have been paying off their mortgages for years.

According to a separate survey of more than 1,400 U.S. homeowners released last week by Harris Poll and Credit Karma, nearly 80 percent of millennial homeowners (ages 27 to 42) plan to put off plans to sell their homes in the next three years.

"Some homeowners are willing to stay in a home they can no longer afford to live in, or even rent out their current home and temporarily move to a more affordable home," the report states.

Some young homeowners are even considering living with a spouse or estranged partner, or delaying having children to avoid selling their home.

In contrast, Credit Karma found that baby boomers between the ages of 59 and 72 are the least likely to be trapped by home prices.

One reason is that they don't need a mortgage: 43 percent said they don't need a mortgage to buy a new home, Credit Karma said. In addition, 28 percent said they have enough money to pay the high interest rates.

With a lack of second homes available for homeowners, some eager homebuyers are turning to new homes. As a result, new home sales jumped 12.2 percent through May 2023, according to the federal government.

(Realtor.com is operated by News Corp. subsidiary Move Inc. and MarketWatch is a division of News Corp. subsidiary Dow Jones).