According to report, there are more homeowners listing their homes for sale on the housing market compared to last year!
Although the number of homes listed for sale on the housing market have risen, properties are taking longer to sell as potential buyers face high prices and interest rates. According to Zillow’s latest market report, new listings from home sellers increased by 13% in May compared to the previous year. However, with fewer buyers, these new listings are gradually building up. The report also found that the number of homes on the market rose by 22% from last year.
“You have an increase in sellers coming back on the market. Homes are staying on the market for a bit longer because the sales are not keeping up with the flow of homes coming on the market”, said Orphe Divounguy, a senior economist at Zillow.
In May, nearly two-thirds (61.9%) of homes listed had been on the market for at least 30 days without going under contract, according to analysis done by Redfin. Additionally, 40.1% of homes had been listed for at least two months without selling.
“The market is slowing down. Homes are taking longer to sell and that allows inventory to accumulate on the market,” said Daryl Fairweather, chief economist at Redfin.
Despite the increase in supply, “we’re still starved for inventory in the for-sale market”, said Divounguy, which is highlighted by Zillow’s report showing that housing inventory in the U.S. is still 34% below pre-pandemic levels. “We’re short by about 4.3 million homes nationwide. We’re still facing a housing unit deficit”, he added.
Homebuyers Are Waiting on Lower Mortgage Rates
High mortgage rates and housing affordability issues are preventing buyers from entering the market, explained Divounguy. “Buyers are facing these incredibly high mortgage rates, at least relative to what they were during the pandemic”, said Fairweather, adding that this affects buyers’ financial ability and motivation to purchase homes.
As of June 13, the 30-year fixed mortgage rate in the U.S. dropped slightly to 6.95%, down from 6.99% the previous week, according to Freddie Mac data via the Federal Reserve. While mortgage rates can change quickly, significant decreases are unlikely in the near term. The Fed held rates steady at its June meeting and expects only one rate cut this year.
“There’s no right answer for homebuyers who are deciding whether to wait or not. It’s just up to chance when mortgage rates drop. Nobody really knows when that will happen, so it’s hard to plan your life around that”, Fairweather said.
Advice for Buyers and Sellers
“When you give buyers more options, that means they have more bargaining power”, Divounguy said. If homes in your area are staying on the market longer, “there’s probably an opportunity to get [a property] for under its listed price”, Fairweather suggested.
During the home inspection, if issues are found that were not initially noticeable or disclosed, it might be worth asking the seller to make repairs, Fairweather noted. However, she advises not to be overly demanding about minor issues like chipped paint.
In some markets, sellers still have an advantage due to tight inventory, Divounguy said. Many homeowners have significant equity and low mortgage payments. And if a seller needs to move due to life changes and faces high levels of unsold listings, they may need to lower their asking price to attract buyers. “Price cuts help sell homes”, he added.