The Lack of Existing Homes For Sale is Creating Hot Markets in Areas of the US

Redfin reported on Thursday (4-7-23) that, although elevated mortgage rates continue to diminish homebuying demand, low inventory in some parts of the US means homes are selling fast.

Redfin says that the number of homes available to buyers is continuing to shrink. New listings are extremely limited. New listings fell 21.8% from a year earlier during the four-week period ending April 2nd, one of the largest drops since the start of the pandemic, contributing to an unusual early-spring decline in the total number of homes for sale. Many homeowners staying in their homes, unwilling to give up their low mortgage rate.

Redfin notes that while the average 30-year mortgage rates posted their fourth consecutive week of declines, dropping to 6.28%, that is still more than double the sub-3% rates common in 2021. The report also pointed out that pending home sales are down 19% year-over-year, which is nearly as much as new listings—the result of both lower homebuying demand than last year and so few homes available in the market.

Adding additional background and analysis to the report, Redfin’s Deputy Chief Economist Taylor Marr said:

“Elevated mortgage rates are perhaps an even bigger deterrent for would-be sellers than for would-be buyers. Giving up a 3% mortgage rate for one in the 6% range is a tough pill to swallow. Today’s serious homebuyers have grown accustomed to the idea of a 5% or 6% rate and have adjusted their budgets accordingly. The lack of homes hitting the market explains why the market is moving fast even though sales are still down. The lack of new listings is also one reason why sales are down: Buyers can’t buy if sellers don’t want to sell.”