- According to Redfin, fewer people are continuing to pay their mortgages as they adjust to rising interest rates.
- The number of new listings rose nearly 15% in February, the largest year-on-year increase since 2021.
- Still, this did not lead to a decline in prices, which rose by 6.6% on an annual basis.
U.S. home sellers are finally getting used to rising mortgage rates. This is fueling housing supply growth momentum and helping to ease inventory shortages, Redfin said in a new report.
The number of new listings in February increased by 14.8% on an annualized basis, marking the highest year-on-year increase since May 2021. The number of monthly listings increased by 3.8%, marking the highest level since September 2022.
“While the housing market is not what it was two years ago during the pandemic home buying frenzy, it is better than last year. It is coming back,” David Palmer, a leading real estate agent at Redfin, said in a report. Stated. “Sellers who were cautious in 2023 are now listed. They are now used to higher interest rates.”
Mortgage interest rates are a source of concern for homeowners looking to sell. That's because many homeowners originally bought their homes when interest rates were far below current levels.
Mortgage rates rose as much as 8% last year as monetary policy tightened sharply in the aftermath of the pandemic, pushing owners out of the market.
With the weekly 30-year fixed mortgage rate now at 6.74%, this “lock-in effect” for homeowners is easing, Redfin said. However, the increase in housing supply has not translated into a meaningful recovery in homebuyers.
As interest rates rose from the beginning of 2024, mortgage purchase applications declined until February. Although mortgage rates are down from last month's average of 6.78%, they are likely to remain high for an extended period of time, Redfin said.
Meanwhile, home sales fell 3.5% year-on-year, but the median sales price rose 6.6% on an annual basis. That's because demand still far exceeds available supply.
With rising mortgage rates and prices, the median monthly home payment in the U.S. through February was $2,686, just $30 below last year's all-time high.
The supply-demand imbalance has recently received the attention of the White House, which released a 10-point plan on how to ease the market. Proposed initiatives include a mortgage relief scheme for first-time home buyers and legal incentives to add 2 million homes.
