New home listings in April were down more than 20% from a year ago and homeowners are increasingly staying put with low mortgage rates locked in, rather than trying to secure a new home at a higher rates.
That’s keeping inventory low and prices high — and sidelining would-be buyers looking to upgrade their homes.
Data from Realtor.com cited by Fortune showed that 392.016 homes were listed for sale in April, below the 497,844 from the same month in 2022, and even further from the 552,082 listed in April 2019.
As RedFin chief economist described the downturn last week on Twitter with a phrase that’s been used in the labor market to describe employees doing minimal work: “Homeowners are quiet quitting the housing market.”
Mortgage rates over the last decade have been historically low, and they were driven even lower by the massive stimulus campaign embarked on by the Federal Reserve during the pandemic. The average 30-year mortgage rate in 2021 was 2.96%, the lowest on record.
Now though, rates are back up and have more than doubled from pandemic-era lows, leaving many buyers who locked in lower rates in recent years reluctant to wade back into the market.
Redfin
The decline in homeowners looking to upgrade has a dual impact, as each homeowner that postpones looking for a new house also signifies one less seller on the market.
It’s worth noting however, as Fortune’s Lance Lambert pointed out, there were 49.3% more homes available for sale — active listings — in April 2023 compared to April 2022 largely due higher mortgage rates causing homes to sit on the market for longer than usual, leading to accumulating inventory.
Still, compared to April 2019, active listings remain about 50% down.
The low number of available houses, at the same time, has pushed buyers who are in the market to snap up homes quickly. Redfin reported that nearly half of homes on the market sell within two weeks, and that share saw an unusual uptick in April.
In any case, still-high mortgage rates and elevated prices have kept affordability low. In March, the average mortgage payment for new applicants climbed 1.6% month-over-month, according to Mortgage Bankers Association data.