June 21, 2024

More Inventory Coming As Rate Lock Eases

The housing market is starting to break free from “rate lock,” Zillow economists said.
C.J. Burton/Getty Images

  • The housing market could be breaking free from the “rate lock” phenomenon that froze activity in 2023. 
  • That’s because owners appear less deterred by high mortgage rates when considering whether to sell their homes, Zillow said.
  • 21% of owners are considering selling their homes in the next three years, a Zillow survey shows.

The housing market is starting to break free from the chokehold of high mortgage rates, and a wave of potential sellers could bring on more inventory to supply-starved buyers in the coming years, according to Zillow.

In a recent survey conducted by the real-estate listing site, 21% of homeowners said they were considering selling their homes sometime in the next three years. If those owners follow through, that could bring on a fresh wave of housing inventory, which is good news for buyers, who have been stymied by a shortage of available homes over the last few years. 

The survey also found that homeowners who have a mortgage rate below 5% are almost equally as likely to consider selling their home as homeowners with rates above 5%. That’s a promising sign homeowners are appearing less deterred by today’s cost of borrowing, with high mortgage rates discouraging many over the past year from listing their properties for sale. 

“Rate lock appears to be wearing off for some homeowners, who show encouraging signs that they’re ready to come back to the market,” Zillow chief economist Sylar Olsen said in the firm’s December housing market report. “The survey data shows more owners with low rates are warming up to the idea of selling, while those with higher rates probably purchased their house fairly recently. Currently, mortgage rates look to be less of a determining factor when considering a sale.”

Mortgage rates have declined in recent months as the market anticipates the Fed to cut interest rates later this year. The 30-year fixed mortgage rate hovered around 6.66% the last week, according to Freddie Mac data. The rate had hit 8% in October of last year. 

Meanwhile, new home listings rose 2% year-over-year in December, Zillow data shows. The total supply of homes on the market is now just 14% lower than it was before the pandemic — an improvement from April, when supply was 35% lower than the pre-pandemic norm.

Lower rates and higher inventory could improve housing affordability this year, after tight supply pushed home prices to record levels in 2023. Home prices climbed another 5% in October, according to an estimate from CoreLogic. Prices and mortgage rates are expected to continue easing slightly this year, Redfin economists predicted.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent. View more