Home Supply Increases, But Stale Listings Persist
The housing market has seen a significant increase in supply, with active listings in November reaching their highest level since 2020. However, this boost in inventory has been offset by the fact that over half of these homes have been sitting on the market for at least 60 days without going under contract.
According to a report from Redfin, the typical home that did go under contract took 43 days to do so, the slowest November pace since 2019. Many homes are remaining unsold due to being overpriced or in poor condition.
Mortgage rates have remained above 7% since October, and home prices continue to rise, with a 3.6% increase nationally in October compared to the same month a year earlier. Despite this, pending home sales rose in November to the highest level in nearly two years.
However, the slower selling pace is a cause for concern, especially with interest rates remaining elevated. Many renters are remaining renters longer due to higher home prices and moving costs. The seller lock-in effect, where some sellers are reluctant to sell due to low mortgage rates, has also started to ease, but only due to life events or the need to tap accumulated equity.
Buyers are struggling to keep pace with housing prices, with the cost of owning a home now at its highest point in decades. The persistent increase in prices and interest rates has created a challenging environment for both first-time buyers and those looking to move up the property ladder.