The lack of sellers in this year’s spring housing market is creating a stew of challenges for buyers in search of affordable homes. That’s according to the April edition of Realtor.com’s Monthly Housing Trends Report.
Buyers in the U.S. housing market are contending with low housing inventory and high mortgage rates. While up from a year ago, the supply of for-sale homes is still well under pre-pandemic levels, mainly because fewer sellers are choosing to list their homes (-21.3%) compared to April 2022.
Also, while listing prices rose 2.5% in April, annual price growth has slowed for 10 months in a row and could show a year-over-year decline later this spring.
A lack of new sellers and homes for sale continues to limit buyers’ choices and home sales. Many sellers are likely future buyers too, which may be why a majority of would-be sellers report feeling ‘locked in’ to their current home because of a low mortgage rate, especially younger homeowners. But older seller-buyers, who are likely to have a smaller mortgage balance and built up greater equity, are less likely to report feeling locked-in by a low interest rate and are more likely to report that they need to sell anyway. This likely means that older households will continue to play a prominent role on both sides of the home sale transaction this year.
Danielle Hale - Chief Economist for Realtor.com®
TOP CONCERNS FOR SELLERS: BUYING BEFORE SELLING, MARKET CONDITIONS, AND REPAIRS
According to a recent Realtor.com site survey, here are the top concerns sellers have about the housing market:
1) - Buying their next home—with 34.2% of sellers indicating this was a major concern when considering whether to sell their current home.
2) - Housing market conditions—including local buyer demand and whether or not they’ll receive any good offers—were cited by 19% of survey respondents, nearly twice the share recorded a year ago and the highest since 2019.
3) - The cost of making repairs and upgrades to give their home its best shot at a good offer, with inflation driving up the cost of home improvements and household furnishings.
It’s become increasingly challenging for many people to become homeowners, and longer-term homeowners who have built equity over many years are likely in the best position to sell and buy in today’s market. To get top dollar for their home and set themselves up for success, all sellers still need to make sure their home is in the best possible condition and shows well. That could include making upgrades, investing in necessary repairs, and painting the home. First-time and younger buyers can still win in this market by watching mortgage rates closely, setting online alerts for any new homes coming on the market, and working with an agent who really knows the market and how best to position an offer.
Clare Trapasso - Realtor.com®'s Executive News Editor
LACK OF SELLERS AND NEW LISTINGS MAKES THE MARKET MORE CHALLENGING FOR BUYERS
According to the April report, the supply of active listings in the U.S. was up from a year ago but increased at a slower pace for the second consecutive month. Also, despite the increase, the inventory of for-sale homes remains 50.5% lower than the April 2019 pre-pandemic level.
The declining supply of new listings—due mainly to the number of sellers opting to sit on the sidelines rather than list their homes—means potential buyers have fewer options to choose from and will likely have to lower the bar to find and get into a home.
Posted by:
Sarah Lentz
May 8, 2023
