Cooling Mortgage Rates Boosted New Listings In November

Mortgage costs cooled in November, cutting some homeowners loose from rate lock-in and easing inventory shortages that helped stall the housing market.

That’s according to Zillow’s latest market report, which found that the new listing deficit shrank to 14.1% below normal, a massive improvement over April’s record low of -35%.

New listings were still down 20.5% month-over-month in November and overall inventory remains down 37.2%, but the numbers still suggest positive movement.

Zillow attributes the data to declining mortgage rates, which may be encouraging homeowners clinging to super-low rates from the pandemic era to finally consider moving. About 70% of sellers are also buying.

The Midwest, the Great Lakes region, and the South are experiencing the smallest new listing declines.

Mortgage rates aren’t the only reason homeowners are staying in their homes longer. A survey by Fannie Mae found that high home prices have also impacted their decision to stay, as well as proximity to friends, family, or their jobs. Many simply said they like their home too much to move.

Homeowners’ tenures have been trending up for decades. In 2022, Americans spent an average of 12.3 years in one home, nearly double that of 2005.

“Even if mortgage rates were to decline meaningfully in the intermediate term, we would not expect to see a surge in home listings,” the survey’s authors wrote in analysis.

Still, more homes for sale incentivize sellers to slash prices, giving those who may be inclined to sell greater opportunities. Typical home values slipped 0.4% from October.

“Home prices are cooling down faster than normal as new listings from existing owners and total inventory slowly recover,” said Zillow Chief Economist Skylar Olsen.

“Mortgage rates are still above 7%, but price cuts are surprisingly common, and mortgage costs eased a bit. These factors favor buyers who are reluctant to pause their home search in the off-season.”

Mortgage costs fell 1.5% from October when that metric peaked at +9% YOY and nearly 120% above pre-pandemic levels. Mortgage payments as a share of household income fell 1.8% from a record high in October to 38.6%.