More homeowners are putting their homes up for sale, but they are staying on the market longer due to high prices and interest rates. In May, new listings from home sellers increased by 13% compared to the previous year, according to a report by Zillow. However, with buyers not returning to the market at the same rate, many new listings are adding to the inventory. The number of homes on the market rose by 22% from last year, leading to longer days on the market for many properties.
About 61.9% of homes listed for sale in May had been on the market for at least 30 days without going under contract, and 40.1% had been listed for at least two months without a sale, according to a Redfin analysis. The market is slowing down, causing homes to take longer to sell and inventory to accumulate. Despite the recent increase in supply, the housing inventory in the U.S. is still 34% below pre-pandemic levels, creating a deficit of about 4.3 million homes.
Buyers have been waiting for lower mortgage rates, but rates have remained high, making housing affordability difficult for many households. The 30-year fixed rate mortgage in the U.S. was at 6.95% in June, down slightly from the previous week. However, buyers may lack the financial ability and motivation to purchase a home due to the current rates. It is uncertain when mortgage rates might drop significantly, as the Federal Reserve held rates steady at its June meeting with only one rate cut anticipated this year.
Some markets in the U.S. are experiencing a significant increase in unsold inventory, giving buyers more options and bargaining power. Markets like Dallas, Fort Lauderdale, Tampa, and Jacksonville have seen a rise in unsold listings that have been on the market for at least 30 days. For buyers in these areas, there may be an opportunity to negotiate a lower price for a property that has been on the market for an extended period.
If you are a buyer, it is crucial to take advantage of the increased inventory in certain markets to potentially secure a better deal. If you notice homes lingering on the market for longer in your area, it may be worth considering making an offer below the listed price. During the home inspection process, if you come across issues that were not initially disclosed, you can negotiate with the seller for repairs. However, it’s essential not to be overly picky about minor issues like chipped paint.
In markets where inventory remains tight and in favor of sellers, homeowners with high home equity and low mortgage payments have an advantage. However, if a seller needs to move due to upcoming life changes and is in an area with high levels of unsold listings, they may need to consider reducing their asking price to attract buyers. Price cuts can help sell homes faster in markets where inventory is limited, according to experts.
