Inventory is doing best in cities with fewer mortgages and older homeowners, reinforcing the impact of high interest rates on the market.
That’s according to a new report from Zillow, which found that metros where more homes are owned outright are seeing the fastest growth in new listings.
Pittsburgh, Buffalo, and Cleveland have the highest share of homeowners free from rate lock-in.
Generationally, Baby Boomers are the most likely not to be impacted by mortgage rates when deciding to purchase a home. That’s compared to just 6% of Millennial homeowners.
More than 10 million homeowners are mortgage-free and could afford monthly payments if they decided to move today. This demographic skews older and tends to live in more affordable markets, like Pittsburgh.
“The so-called mortgage rate lock-in effect has seriously curtailed both home sales and inventory over the past two years. Homeowners are more free to sell in less expensive areas – bringing more resale inventory into the market and facilitating sales,” said Orphe Divounguy, Zillow senior economist.
“Massive appreciation has left homeowners with record levels of equity, and many are financially able to move on, even given today’s higher rates.”
At the same time, Americans appear to be acclimating to the current environment as rates stabilize in the mid-6% range.
New research from Fannie Mae found that consumers are pessimistic about the trajectory of rates but are warming up to the idea of buying a new house.
“With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
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