The number of home listings recorded the largest increase in the past three years. (iStock)
As of the end of February, the number of housing listings had increased by 13% compared to the previous year. According to a Redfin report. This is his biggest increase in three years.
The total inventory in the market has also remained flat. This is the first time in about nine months that the number of homes on the market has not decreased.
While the number of home listings is rising, home prices are also rising. Zillow reports that home prices remain historically high. The average mortgage payment is $2,671, close to the all-time high set last October.
These higher costs led to an 8% decline in pending sales, the largest decline in five months. So while the number of listings is up, the number of purchases is down as buyers struggle to cope with high housing costs and record homeowner insurance costs.
Even though purchases are down, buyers are still considering homes. Redfin measures requests for tours and other home buying services through the Home Buyer Demand Index. The index rose 10% from the previous month to its highest level since September.
“People are out there looking for homes, and every time mortgage rates drop a little bit, the competition increases,” said Bryn Rea, a Redfin Premier agent in Spokane, Washington.
“We’re telling buyers who can afford it to consider it now, when they can afford it more and there’s less competition,” Rea said. “They will likely be able to negotiate a lower price or get some concessions from the seller, which may compensate for the mortgage rate being 7% instead of 6%.”
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Homebuyers considering buying a smaller home or a fixer-upper to combat rising home prices.
Mortgage interest rates remain close to 7%
Buyers are tired of buying, mainly due to rising mortgage rates. Interest rates haven’t continued to fall as much as the Fed and housing experts suggested late last year that rates could fall. As of the end of February, the average interest rate on a 30-year fixed-rate mortgage was 6.94%, marking the fourth consecutive week of interest rate increases. According to Freddie Mac.
15-year mortgage rates have improved slightly to an average of 6.29%, but are still higher than last year, when the average interest rate was 5.89%.
“The recent spike in interest rates has already dampened tentative homebuyer momentum as we approach spring, historically a busy season for homebuying,” said Sam Cater, chief economist at Freddie Mac. . “While new home sales are trending positively, rising interest rates and rising prices continue to pose affordability challenges that can keep potential homebuyers on the sidelines. ”
Interest rates are high, but not as high as they have been in recent years. If you want to lower your monthly payments, consider refinancing now. Use Credible’s free online tools to browse a variety of mortgage refinance lenders and learn about your loan options.
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Home sellers’ profits are on the decline
No one is making a profit in this turbulent housing market. Buyers are struggling to find affordable housing, while sellers are also making less money on property sales.
In 2023, sellers made an average profit of about $121,000, down from $122,600 in 2022. According to the ATTOM report. Although profits were generally high in 2023, it was the first decline since 2011, when the market recovered from the 2008 recession.
“There is no doubt that last year was another very strong year for most home sellers in the United States, with typical profits exceeding $120,000 and profit margins exceeding 60%,” said Rob Barber, CEO of ATTOM. %, but still more than double what it was just five years ago.” He said.
High interest rates and other housing-related costs aren’t helping sellers’ profits pick up in 2024.
“2024 looks poised for even smaller price changes and seller gains, given the competing forces of interest rates that have trended downward in recent months and continued tight housing supply, but housing The cost of ownership remains a serious financial burden for many households. ” Barber said.
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1 in 5 homeowners plan to sell in the near future: Zillow
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