The housing market typically booms in the spring when buyers show up in warmer weather. The market appears to be in deep freeze this year, with a shortage of sellers being the biggest culprit, housing experts say.
There is interest among buyers and mortgage applications 10% up in March From the previous month – but fewer homes for sale. and a terrified onlooker at mortgage rates.
more than three-quarters of sellers in A recent study by Realtor.com Respondents said they felt “trapped” in their homes because of low mortgage rates. A recent study by Realtor.comMore than half said they would wait until interest rates drop before putting their homes on the market.
Sandy Robinson, a 71-year-old retired teacher from Fairhaven, Massachusetts, is terrified of the market. She wants to sell her 2 bedroom townhouse, but she’s worried if she can afford a new house. “I’m a little scared right now, so I have to be careful,” she said.
The stalemate is putting a damper on the housing market, which should have been stronger. Sales of existing homes in March fell 22% year-on-year, according to the . National Real Estate AssociationAt the end of March, the stock of unsold homes on the market was 2.6 months, and that’s how long it takes to sell. Inventory is usually double that to balance supply and demand.
“We are in a real stalemate,” said Robert Frick, a corporate economist at the Navy Federal Credit Union. It’s going to be such a complicated process.”
Fewer homes for sale means more competition among buyers, which leads to bidding wars and pushes up prices. Average home prices are still about 40% higher than he was in early 2020, although down from recent highs. S&P CoreLogic Case-Shiller Indexto measure prices nationwide.
Todd Teta, chief product and technology officer at real estate analytics firm Attom Data Solutions, said:
Matt Berger wants to sell his three-bedroom starter home in Lebanon, Ohio where he lives with his wife and two young children, but hesitant. “It feels tight now, but it will only get tighter as the kids grow,” he said.
They want to move closer to Cincinnati, but the house they bought a year ago is now out of their price range. Adding to the pressure is the low mortgage rates on their current homes. 42.
“This is the double hit of rising interest rates and high house prices, which is scaring us,” he added. He and his wife are hoping to find a cheaper home in a year or two until mortgage rates drop and the kids settle into school.
The most popular mortgage, the 30-year fixed-rate mortgage, has an average interest rate of 6.43%. freddie mac It was reported on Thursday, more than double what it was two years ago. Mortgage rates peaked at he over 7% late last year, but the decline since then has been gradual and spotty.
Interest rates need to fall to the 5.5% “magic mortgage rate” to get sellers motivated again. Research by John Burns Research and ConsultingMore than 70% of prospective homebuyers told researchers they wouldn’t accept a mortgage over that rate.
“Homeowners seem pretty patient so far,” said Megan Sherlock, senior research analyst at John Burns. “They will hold out until things get a little better,” she added.
Most industry experts believe the tipping point is still far away. “This year will be a year of transition,” said Daniel Hale, chief economist at Realtor.com. “In 2024, there should be more people willing to buy.”
Attom’s Teta said the market could also unwind as demand from disgruntled buyers is met by home builders.
A shortage of existing home inventory appears to be pushing buyers toward new homes. Sales of new single-family homes in March jumped nearly 10% from the previous month. According to the Census Bureau.
The National Association of Realtors expects new home sales to grow 4.5% this year and 12% in 2024. We expect existing home sales to fall by about 9% this year before recovering in 2024.
There are always reasons why reluctant homeowners are forced to sell, including job transfers, layoffs and divorce, said Ileana Abella, executive director of sales at property brokerage Abella Group.
“If you plan to live in the house for five years or more, even 6% won’t kill you,” he said of current interest rates.
Still, many homeowners are happy to wait.
Ellen Goldman, a 72-year-old former attorney in Naples, Fla., is considering laying off staff. She and her husband, Sam Savage, have lived in a two-story house since 2004, but recognize that stairs get harder as they get older.
“We’re both doing great and it doesn’t matter,” Goldman said, adding, “I want to act now before it gets too difficult.”
But they are in no hurry. “We don’t have to do this,” she said. “We can stay too.”
