Inventory and rate pressures are creating conditions for a “quieter” spring homebuying season.
That’s according to HouseCanary’s March Market Pulse Report, which found that while inventory is up 12.6% YOY, total stock remains historically low.
In March, net new listings slipped 4.4% YOY. For the entire last 52 weeks, net new listings were down 12.4%.
HouseCanary says the decrease in net new listings was driven by a 2.5% drop in new listing volume, plus a 7% increase in removals compared to March 2023.
“Over the past month, net new listings and contract volumes have continued to trend at multi-year seasonal lows. The interest rate shock is the biggest factor responsible for sustaining inventory scarcity,” said Jeremy Sicklick, Co-Founder and CEO of HouseCanary.
In the current environment, trading up to a 25% more expensive home would more than double the average mortgage holder’s monthly payment. Even moving to a similarly-priced home in the same neighborhood would increase principal and interest payments by 40%.
Those figures are even steeper for homeowners who bought when rates were at record lows during 2020 and 2021.
“Mortgage rates need to come down to dislodge the lock-in effect,” Andy Walden, Vice President of Enterprise Research Strategy, noted. “Since most factors influencing 30-year rates are out of lenders’ control, they need to be able to find ways to compress spreads without simultaneously compressing their own profit margins.”
Sicklick added that buyers feel hopeful for change when the Central Bank begins cutting rates.
Federal Reserve Chair Jerome Powell said after the latest FOMC meeting that inflation may not reach 2% until 2026, but it is likely rates have hit their peak, and the committee plans to start dialing them back at some point this year.
Wall Street expects the first cut in June. Until then, buyers face a seller’s market, Sicklick says.
“With rates and home prices continuing to rise, we expect a quieter spring buying season to continue throughout the months ahead.”
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