When mortgage rates rose toward 8% last fall, the housing market that had boomed in the pandemic era slowed to a crawl, with demand hitting the lowest level in nearly three decades. 

The average rate for a 30-year fixed mortgage is now more than a percentage point lower than its October peak, fueling hopes that more would-be sellers might be willing to make a move and thereby ease the ongoing inventory shortage.

Although there have been a few signs that the real estate market might come back to life, fresh data indicates it is actually deteriorating further.

The Kobeissi Letter posted analysis from Reventure Consulting this week indicating that despite the drop in rates, mortgage demand fell last month to a fresh 30-year low, down 14% from a year ago and 40% from pre-pandemic levels.

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Meanwhile, available home supply is still down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020.

So why are more homeowners not willing to move? Maybe the question should be, ‘Why would they?’"

"Even with a drop from 8% to 6% mortgages, many homeowners have a financial disincentive to move." The Kobeissi Letter explained in a post on X, noting that 90% of borrowers still have mortgage rates below 5%.

At the same time, it is not just reluctance to taking on a higher interest rate that is causing many homeowners to stay put. The price of homes continues to soar, making the affordability crisis worse.

U.S. home prices hit a new record high in November, marking the 10th consecutive month of price hikes. The problem is unlikely to be resolved anytime soon.

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"A more substantial improvement in mortgage rates is necessary to attract more sellers to the market," Realtor.com economist Jiayi Xu said in a statement. "If for-sale inventory fails to meet the demand from buyers, there is a possibility that prices may start to climb once again, contributing to the persistence of higher home prices."

The Kobeissi Letter predicts rates need to fall significantly before the housing market sees real movement again.

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"In order to stimulate meaningful housing market demand, we need to see rates fall to 5% or lower," the analysts wrote. "Until then, we have a historically undersupplied market with high prices."

FOX Business' Megan Henney contributed to this report.