Housing prices remain high, but it is not inflation or a booming market keeping them up—it is a lack of new listings.
Key Details
- New home listings have dropped significantly in the last year. Nationwide, listings dropped 22.4% from a year before in April.
- The drop is one of the most significant declines since the pandemic, real estate brokerage Redfin found.
- Fewer homeowners are looking to sell because their current interest rate is significantly lower than the mortgage rates on homes today.
- The average rate of a 30-year mortgage increased again this week, indicating that homeowners will not be willing to move any time soon.
Why it’s news
The drop in inventory is causing several ripple effects on the overall housing market. Prices have remained elevated due to low supply, but the available houses move quickly as buyers want to pounce on any available option.
Around half of all homes are selling within two weeks, Redfin reports. This came after a recent slowdown in the market when houses were sitting for about a month. Still, high mortgage rates are stopping some buyers from making a purchase, but highly-motivated shoppers are still willing to take the plunge.
With fewer homes on the market, buyers are competing with one another for available homes. This has prevented home prices from falling any more than they had been. Still, Redfin found that the U.S. median sale price had dropped 2.8%—in line with declines from the months before.
Certain areas of the country are experiencing more price drops than others. Here are the most significant declines
- Austin, Texas, 13.7% decline
- Oakland, California, 13.5% decline
- San Francisco, California, 12.3% decline.
In some areas, demand for housing is on the rise again. Home buyers are expecting to get a deal on housing because of the high interest rates, but low inventory is preventing that from happening.
“Some buyers are hoping to get a deal because mortgage rates are high, but prices for desirable homes are actually going up because there’s such limited inventory,” Seattle Redfin agent Shoshana Godwin says. “I’m telling buyers that prices may rise from here because inventory will remain tight as long as interest rates are high. Those who can afford to should consider buying now if they’re lucky enough to find a home they want.”