The U.S. housing market is witnessing an intriguing shift: home listings are on the rise, but buyers are showing restraint as mortgage rates continue to ascend. According to Redfin, a technology-powered real estate brokerage, new listings of U.S. homes for sale soared by 13% year over year in the four weeks concluding on February 25. This surge is the highest increase in nearly three years. However, rising mortgage rates and persistently high property prices are causing potential buyers to pause.
In a welcome turn for prospective homeowners who have been grappling with limited choices and soaring mortgage costs, the total inventory of homes for sale has steadied. For the first time in nine months, active listings have not dipped compared to the previous year. However, while the pool of options has broadened, buyers are still faced with historically steep housing prices. The typical mortgage payment now stands at $2,671, just $47 below the record high set last October.
The burden of high costs has resulted in an 8% slump in pending sales, the sharpest fall in five months. Furthermore, mortgage-purchase applications have receded for the fourth consecutive week. Despite these statistics, more prospective buyers are entering the market as more homes become available. Redfin’s Homebuyer Demand Index—a metric that tracks requests for tours and other services from Redfin agents—has climbed 10% from a month ago, reaching its highest point since last September. If mortgage rates do not escalate further and new listings sustain their upward trend, pending sales could see a revival in the coming months.
Brynn Rea, a Redfin Premier agent based in Spokane, WA, advised that despite the daunting 7% mortgage rate, it’s a good time for those who can afford it to explore the market. “House hunters are out there, and competition picks up every time mortgage rates decline a bit,” she said. “I’m telling buyers who can afford it to look now while they have more breathing room and less competition. They have a good chance of negotiating the price down or getting some concessions from the seller, which could make up for getting a 7% mortgage rate instead of 6%.”
The current dynamics in the housing market present a mixed bag for buyers. The increase in new listings offers more choices, but the steep mortgage rates and high home prices are compelling buyers to exercise caution. It remains to be seen how these factors will shape the U.S. housing market in the coming months.
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