According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume dropped 5.6% last week from the previous week. The average 30-year mortgage rate continues to float above 7%, disincentivizing potential homebuyers.

Taylor Morrison (TMHC) CEO Sheryl Palmer joins Yahoo Finance to discuss how the housing market has dealt with the volatile rates.

Palmer suggests consumer tolerance is growing: "The consumers have come a long way in the last year, 18 months, when rates were flirting at the 7%. The difference from where we are today to where we were then is, back then they were still hoping rates would go back to 4%. I think the consumer has met us kind of in the middle, recognizing that rates in the fives or sixes is actually, from any kind of long-term historic perspective, a really good rate."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

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- Mortgage rates rising again this week, reaching a two-month high and flirting with 7% yet again. And it comes as pending home sales fell nearly 5% in January. Let's welcome in Sheryl Palmer, Taylor Morrison CEO. Sheryl, it's good to see you.

SHERYL PALMER: Good to see you.

- I want to start with the 30-year fixed, Sheryl. Let's take a look at that. So we're not at 8% like we were in October. So that's nice. But according to Mortgage News Daily, we are at 7.1%. What does that mean. Sheryl, just for the housing market and home builders?

SHERYL PALMER: Yeah, it's been volatile for a while now, right? Like you said, we were at 8% in the fall. Then we were at 6 and 1/2. Now, we're at 7, just over 7, I think, at par. I think the consumer is getting a little bit more, I think, you know, recognizing that we're seeing this kind of volatility.

What does it mean? The consumers have come a long way in the last year, 18 months when rates were flirting at that 7%. But the difference from where we are today to where we were then is back then, they were still hoping rates were going to go back to 4%. And I think the consumer has met us kind of in the middle, recognizing that rates in the 5s or 6es is actually from any kind of long-term historic perspective a really good rate.

So, you know, what we are able to do in the new home market is really help our customers understand the different programs that are available to them. So we're able to go into the market by what we would call a forward commitment, have that available. So customer walks in. And even though they could go to the bank and get a 7, 7 and 1/4 rate, we can offer them like a 5.49. Maybe FHA, it's 4.99.