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What you need to know
- Redfin reports that although winter is usually a time of reduced housing market activity, sellers continue to list their properties to benefit from high prices and buyer interest.
- The residential real estate firm said that buyers who were hesitant to switch from their current low rates of mortgage have now realized the rates are the new norm.
- If sellers continue to list their homes, the "lock-in effect" could be reduced, and the longstanding housing shortage might ease.
Home owners who had been reluctant to sell their property are listing them to capitalize on the high price of homes and increase in buyer activity.
Redfin, a residential real-estate services firm, released a report on Thursday based upon data for the month ending Dec. 15, which showed that although winter is typically characterized by fewer housing transactions, the number of homes listed has increased since June.
This trend will lead to a housing shortage due to high construction costs. “lock-in effect” Could ease.
Why Do Sellers List Their Homes?
Redfin says that sellers have jumped back on the market in order to benefit from high prices. The company reported that the median U.S. house sale price has increased by 6% since the beginning of last year. This is the second largest increase in the past 10 years.
Additionally, home owners were confident to list their houses after the results of the presidential election in November. Most consumers waited until the end of November to make big financial decisions. Then, confidence in consumer spending reached its highest level for 16 months.
Redfin’s Homebuyer Demand Index (a measure seasonally adjusted of homebuying and tour services provided by its agents) is at its highest point since August 20,23. It shows that the interest from both sides of the equation has increased.
Mortgage rates remain high, and buyers are less inclined to exchange the super-low mortgage rates locked in before the pandemic. Redfin reports that although mortgage rates remain higher today than they were a few short years ago, their average weekly mortgage rate has been declining for the past three consecutive weeks.
It is also re-engaging hesitant buyers. Redfin reported that mortgage applications were up 18% and that pending sales of homes are now 4.1% more than they were last month.
“Buyers are coming out of the woodwork because they’ve accepted that rates in the 6% to 7% range are the new normal, and they know that if they wait to buy, mortgage rates will probably stay the same but prices will be higher,” David Palmer, a Redfin Premier agent in the Seattle area, said.
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