Listings are down more than 15% from last year, another pain point on the market ahead of the typically zippy spring buying season.
HouseCanary’s February Market Pulse Report found that net new listings were 15.3% lower than in February 2023. Overall, inventory is up 11.7% YOY but remains generally constrained, limiting new activity.
This is yet another example of market pressures as spring approaches, usually a busy homebuying season.
“In January, we saw net new listings and contract volumes trend at multi-year seasonal lows. Although those metrics are slightly up versus last month, the housing market is still facing significant pressures. The Federal Reserve has all but confirmed that rates will continue to hover around the 7% mark, continuing to keep many potential buyers wary of a purchase and potential sellers unwilling to part with their current rate,” said Jeremy Sicklick, Co-Founder and Chief Executive Officer of HouseCanary.
The Central Bank is not expected to cut its benchmark rate anytime soon. Wall Street predictions begin no earlier than June.
Putting further pressure on buyers, prices for both new and existing homes keep climbing. Americans must earn nearly $50,000 more now than in 2020 to make a purchase comfortably. The median income has only grown 23% in the same time period, however.
“Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros. Mortgage rates easing down has helped some, but the key to improving affordability long term is to build more homes,” Orphe Divounguy, a senior economist at Zillow, said.
Builders are trying to keep up with demand but simply can’t build fast enough.
They also can’t build cheaply, a problem that adds to upward price pressures. Builders say labor shortages, lack of buildable land, and high costs– both for supplies and staying compliant with regulations, which the National Association of Home Builders says accounts for 24% of a home’s final price tag– keep new construction unaffordable for many Americans.
This is despite the incentives offered by builders, including popular mortgage rate buydowns.
“We expect a muted spring buying season and current trends to persist until rates or home prices fall. With recent Fed decisions and low inventory, it might be some time before either of those trends take hold,” Sicklick added.
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