Buyer hesitancy is driving up the number of ‘outdated’ homes, reports show

The housing inventory is increasing, but if high mortgage interest rates And house prices remains stubborn, many new listings are hitting the market without contracts, according to reports from Redfin and Zillow.

The pandemic era housing shortage becomes less severe as supplies accumulate. Zillow found that inventory rose 22% in May compared to the same period last year. It is still 34% below pre-shutdown levels, but the deficit continues to shrink.

The latest Zillow report shows that home sellers are re-entering the market, but are faced with hesitant potential buyers. Allow slow contract applications buyer competition and price growth will slow.

Home prices have remained just above their record highs and the average 30-year mortgage rate is a stubborn 6.99%, more than double the pandemic-era lowsays Redfin.

Zillow found that new listings rose sharply by 8% between April and May, surpassing home sales last month.

Homeowners are becoming less attached to the low interest rates imposed during the pandemic. Recent sellers, according to Zillow, were motivated to list by external life events, such as starting a family, rather than seeing favorable financial circumstances.

“The rate lock appears to be loosening: Homeowners who may have been delaying listing their homes are done waiting. But just as more and more choices became available for sale, buyers turned on cruise control,” said Orphe Divounguy, senior economist at Zillow . “Inflation has hit younger households hardest, and persistently high interest rates have put a mortgage out of reach for many first-time buyers. That has cooled competition for houses. If these trends continue, there is a good chance that price growth will level off or decline. the coming year.”

Even if homeowners decide to list, they won’t necessarily be successful this summer. According to Zillow, sales in May were 6% lower than last year.

But buyers may find it easier to save for a down payment in the future, according to the report. Even though house prices are still 45% higher than before the pandemic, values ​​have fallen slightlyand by May of next year, Zillow expects home values ​​to drop 1.4%.

A quarter of all homes on the national market saw a price drop in May, the largest number of homes that saw a price drop in six years. Zillow says it’s likely buyers will be able to purchase a leftover property for less than the asking price.

A report from Redfin shows that more than three in five home listings were on the market for at least 30 days in May. Agents say turnkey homes in attractive neighborhoods are selling quickly, but many other homes are languishing.

The number of “aging” homes is up 60% from last May and roughly 50% higher over two years, Redfin says.

Two in five May listings, about 40%, have not been contacted in more than 60 days. Last year was no different, but the numbers are almost 28% higher than in 2022. Redfin economists say that number is likely to rise this month if rates remain high.