Home sellers are opting to remove their houses from the market instead of dropping prices to address rising housing costs. The past five years of a booming housing market have cooled, largely because buyers are struggling with increased prices and ongoing high-interest rates.
This has led many sellers to avoid accepting lower profits and, as a result, the number of homes taken off the market surged by 47% nationwide in May compared to last year, according to Realtor.com.
The rise in listings is, in part, attributed to the broader increase in active inventory.
“Many sellers still hold on to their expectations of peak prices, supported by strong financial positions,” commented Daniel Hale, Chief Economist at Realtor.com. If they don’t get their expected price, they’re choosing to step back.
Yet, she noted, overall home inventory has reached new highs since the pandemic.
“In contrast to past cycles, where price reductions forced distressed homeowners to sell, today’s sellers are benefiting from historically high home equity, giving them the choice to wait for better offers,” remarked Jake Crimel, a senior economist at Realtor.com.
This situation enables sellers to pull their homes from the market if their price isn’t met, he added.
Meanwhile, the Federal Reserve has kept interest rates steady as of July, with Chairman Jerome Powell stating that “despite increasing uncertainty, the economy is solid.”
Over 1 Million Homes for Sale
In June, about 1.36 million homes were sold, the highest number since November 2019, as reported by Zillow in July.
Despite some sellers taking their homes off the market, a portion are still reducing prices.
In June, 26.6% of sellers cut prices, marking a record, predominantly coming from the Sunbelt and Mountain West regions.
