Are Sellers Returning to the Market?

Sellers are seemingly coming out of the sidelines and getting ready to list their properties on the market, real estate platform Redfin said on Friday, even as buyers remain wary of elevated mortgage rates and high prices.

New listings jumped to their highest level since September increasing by almost 4 percent last month. For the year, they were up by close to 15 percent. Part of the reason that sellers are now willing to get into the market is that they have now come to terms with high interest rates.

“The housing market is nothing like it was two years ago during the pandemic homebuying frenzy, but it’s better than it was last year. It’s coming back,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a statement. “Sellers who were on the fence in 2023 are now listing. They’re more used to elevated rates now. There still aren’t enough listings to quench pent-up buyer demand, but it’s getting better.”

Mortgage rates had soared to a peak of 8 percent in the fall, which kept buyers away from the market as they struggled to afford the home loans lenders were offering. On the flipside, sellers, a significant number of whom owned cheap mortgages, balked at giving them up to enter a housing market that would demand more in monthly payments. This froze the existing housing market, which essentially collapsed in 2023, and stifled supply.

However, sellers are now ready to take the plunge, according to Redfin. The question now is whether buyers will be ready to jump in as well. Mortgage rates are still near the 7 percent level as the economy suggests rates may stay higher for longer.

“Housing supply is finally starting to recover in a meaningful way, which is great news for buyers who for months have been competing for a tiny pool of homes for sale,” Redfin economics research lead Chen Zhao said in a statement. “Still, many house hunters are hesitant to pull the trigger because mortgage rates and home prices remain elevated.”

This may explain why sales were tepid in February, jumping by half a percent from the prior month but they were down 3.5 percent on yearly basis. Prices jumped by 7 percent from the same time a year ago in what Redfin said was the largest increase since September 2022 to nearly $413,000.

Homes are expensive because there is still a lack of enough supply to match demand. As promising as new listings were in February, homes on the market are behind pre-pandemic levels, Redfin said.

“If you price your home reasonably, buyers will show up. If you don’t, buyers will wait for you to drop the price,” Palmer said.