New listings fell 23 percent year over year, bringing the number of homes on the market down 39 percent compared to the same period five years ago, according to a Redfin analysis released Thursday.
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The number of homes for sale in the United States fell 6 percent from a year earlier in the month ended June 11, a nearly 40 percent free fall from five years ago. analysis published Thursday by Redfin.
New listings fell 23 percent year-over-year in the same period, pulling the total number of homes on the market down 39 percent from June 2018, according to Redfin data.
The drop in inventory is due in part to a decade-long slump in home construction and mortgage rates that have climbed to 20-year highs, making most potential home sellers reluctant to list homes and forgo lower mortgage rates.
“Fed Indications.” [Wednesday] that more rate hikes are coming is not what homebuyers want to hear,” Redfin Economics head of research Chen Zhao said in a statement. “It’s likely to keep mortgage rates elevated and may even push them up a little bit.”
A separate Redfin study was published this week found that nearly 92 homeowners with mortgages have an interest rate below 6 percent. Additionally, 82.4 percent boast a rate below 5 percent, 62 percent enjoy a rate below 4 percent, and 23.5 percent are lucky to lock in at a rate below 3 percent, according to the analysis.
Record low mortgage rates in 2020 and 2021 sent the housing market into a frenzy that also depleted much of its inventory. In March 2019, 1.4 million households entered the market in the United States. Three years later, those stocks were cut in half to just 727,000.
While a slowdown in the housing market led to a surge in inventory — up 18 percent year-over-year in February, according to a report from Intel earlier this week — that recovery came to a screeching halt as the market hit a lack of new listings.
Mortgage rates have more than doubled in the past year, it landed nearly 7 percent this week. The Federal Reserve voted at its June meeting that this month after a positive inflation news, but Fed Chairman Jerome Powell has left the door open for future rate hikes if the economy doesn’t continue to cool — dashing the hopes of homebuyers hoping for lower mortgage rates.
“People sitting on the sidelines waiting for mortgage rates to come down should know that it’s not likely to happen anytime soon,” Zhao added. “If a home comes on the market that’s in your price range and has everything on your wish list, there’s no reason to wait.”