According to a report published last week by Realtor Magazine, the unstable market conditions in the US are causing homeowners to be reluctant to sell their properties, resulting in a serious shortage of supply. The number of homes listed for sale in April was significantly lower than pre-pandemic levels, and new listings dropped by 21.3% compared to the same period last year. Among the 50 largest metropolitan areas analysed in the report, only Austin, Texas had more inventory in April than the average levels seen between 2017 and 2019.
According to a report published last week by Realtor Magazine, the unstable market conditions in the US are causing homeowners to be reluctant to sell their properties, resulting in a serious shortage of supply. The number of homes listed for sale in April was significantly lower than pre-pandemic levels, and new listings dropped by 21.3% compared to the same period last year.
Majority of potential home sellers are also planning to buy a new property in the future, which could be the reason why they feel stuck in their current homes. This feeling is particularly common among younger homeowners who have taken advantage of low mortgage rates.
A recent survey conducted by the company highlights the fact that one of the top concerns for sellers when deciding whether or not to sell their home is buying a new home first. About 34.2% of respondents stated this as their main concern. On the other hand, 19% of participants expressed concerns about the overall market conditions, such as low demand and unattractive offers.
According to experts, older home sellers are less likely to feel restricted by low interest rates and are more likely to sell their homes regardless. This is because they tend to have more equity and smaller mortgages. Therefore, older households are expected to play a significant role in the home sale market this year.
In April, the listing prices of homes increased by 2.5% compared to the same period last year, reaching an average of $430,000. However, this growth rate is the slowest since April 2020. Despite this, sellers are still listing their homes at higher prices, which has led to a rise in the number of discounted homes in April compared to last year.
According to the report, in all 50 metropolitan areas analysed, 12.2% of homes listed for sale had their prices reduced last month, which is an increase from 6.8% in April 2022.
The US housing market is expected to worsen this year due to the sharp increase in borrowing costs since the 1980s, which is deterring potential buyers. Redfin, a real-estate brokerage firm, predicts that home values in the largest economy in the world could decline by up to 5% in the second quarter, while Zillow, an online property marketplace, forecasts a slight decline in prices throughout 2023.
However, economists from both companies believe that a housing crash similar to the one in 2008 is unlikely to occur this year. This is because most US homeowners have low interest rates and are not under pressure to sell, which means that there may not be many distressed sales. Additionally, the 2008 housing crash occurred amidst a wider credit-market crisis, whereas the current situation is not as severe.
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