The Strange New Stumbling Block Tripping Up Homebuyers: More Listings, but Slimmer Pickings
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While high mortgage rates are no doubt weighing heavily on many homebuyers’ minds right now, home shoppers might also have a gut feeling that something else is off, too. Something less serious than their financing woes, but perhaps even more annoying.
Namely, when perusing listings, they might come away with a sense of déjà vu—as in, That house, again? It hasn’t sold yet?
If this feeling seems familiar, rest assured it’s right on the money.
We looked at the latest statistics in our column “How’s the Housing Market This Week?” Today’s real estate inventory is awash in stale listings that homebuyers have already sized up and passed over. Meanwhile, those shiny new listings that give home shoppers hope that The One is still out there are dwindling.
But why? Since numbers never lie, here’s what the latest real estate data is saying, so that both homebuyers and sellers can understand what’s going on.
‘Soaring mortgage rates have shifted the market’
The source of these ripple effects, of course, is today’s high interest rates. The Federal Reserve has hiked its short-term interest rates five times in 2022 in its ongoing fight against inflation. This, in turn, has caused mortgage rates to nearly double over that time frame from the 3% to 6%-plus range.
For the week ending Oct. 6, the average 30-year fixed mortgage rate hovered at 6.66%, according to Freddie Mac. That’s down just slightly from last week’s 6.7%, but it’s still high enough to give plenty of homebuyers cold feet.
“Soaring mortgage rates have shifted the market,” notes Realtor.com® Chief Economist Danielle Hale in her analysis. “Buyers are less eager as they navigate much higher costs for similar homes.”
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Watch: 4 (Mostly) Bright New Realities of Buying a Home Today
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Why high mortgage rates are bad for home sellers, too
Rising rates on home loans are also dampening the enthusiasm of sellers, since many would become buyers who’d have to finance a new loan at today’s higher rates. Rather than foot those higher costs, many are deciding to stay put and not list at all.
“Homeowners continue to be more hesitant to list homes for sale this year compared to last,” says Hale.
For the week ending Oct. 1, the number of new listings on the market dropped by 17% compared with this same time last year. That’s the 13th straight week of year-over-year declines.
Yet, on the other hand, overall housing inventory—both fresh listings and oldies that haven’t been bought yet—has grown sizably by 30% over last year.
“Home shoppers have more homes to choose from this year, and these homes are generally on the market longer than they were last year,” points out Hale.
Currently, properties linger on the market for a median of 50 days. And for the week ending Oct. 1, they spent 6 more days on the market compared with a year earlier. The pace of home sales has slowed, in fact, for 10 weeks straight.
“This means that buyers will have more time than last year or earlier this year to think through their options before missing out,” says Hale.
Why stale listings are a ‘mixed bag’ for homebuyers
Ultimately, homebuyers do have more options today, even if many have been picked over already. But let’s face it: Some homebuyers may find it hard to get all that excited about viewing (or rather, reviewing) properties that didn’t catch their eye the first time around.
This lack of fresh real estate meat, so to speak, creates what Hale calls a “mixed bag” that “can be draining for shoppers with very specific must-have lists.”
In other words, picky homebuyers who’ve set a high bar to find the perfect home may get frustrated. But today’s distinct mix of listings does behoove a different breed of buyer: bargain hunters who are willing to haggle and aren’t too hung up on a home having it all, as long as the price is right.
Today’s market “may create better opportunities for negotiation on price for those who are more flexible about what they need to have in their next home,” Hale says.
What’s happening with home prices
Yet, even though home prices may be softer, they’re still high.
Currently, home prices hover at a national median of $427,000—and for the week ending Oct. 1, prices continued to rise by 13.3% compared with the same week last year. This is the 40th straight week of double-digit price growth.
“However, buyers who have been searching for a while will note that the pace of year-over-year growth has slowed,” says Hale.
Home prices are also sloping downward seasonally from their record-setting apex in June of $450,000. And over the next 12 to 18 months, some experts estimate that real estate prices may fall by 10%.
That may mean that homebuyers will hopefully find some much-needed relief—and less annoyance—as we make our way toward the holidays and into 2023.
The post The Strange New Stumbling Block Tripping Up Homebuyers: More Listings, but Slimmer Pickings appeared first on Real Estate News & Insights | realtor.com®.
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