Frustrated home sellers nationwide pulled listings off the market in April at a pace not seen since March 2020, a period when the housing market experienced a freeze at the onset of the pandemic. According to Redfin, a prominent real estate brokerage, 5.8% of all home listings were delisted during April. This figure represents a 3.8% increase compared to March and ties with December for the highest share of delisted homes since the early days of the pandemic.
The surge in delistings reflects a challenging environment for sellers, driven by several factors including elevated mortgage rates, rising gas prices, and a general weakening of consumer confidence, all of which are dampening housing demand. Sellers are finding themselves in a less dominant position, often unable to secure their desired asking prices. This shift in market dynamics is particularly evident in certain metropolitan areas. Atlanta, for instance, recorded the highest share of homes pulled off the market in April, with one in ten listings being delisted. Other major cities also saw significant delisting activity, including San Jose, California, with approximately 9% of listings pulled, followed by Los Angeles and Dallas, both at 7.8%, and Seattle at 7.7%.
Mortgage rates have played a pivotal role in shaping the current market. While rates had shown a downward trend at the beginning of the year, with the 30-year fixed mortgage briefly touching the 5% range at the end of February, according to Mortgage News Daily, they subsequently jumped sharply following the start of the war with Iran and have remained elevated since then. This increase in borrowing costs has significantly impacted buyer affordability and negotiating power.
Patricia Ammann, a Redfin agent, noted in a release that "Buyers know they have negotiating power, often offering under the asking price and completing inspections, but some sellers just won't budge." This indicates a standoff between buyers seeking better deals and sellers reluctant to lower their expectations. Despite some easing, home prices generally remain higher than a year ago and have even shown signs of strengthening more recently. Selma Hepp, chief economist for Cotality, commented in a release that "Markets that depend more heavily on traditional mortgage financing and rate-sensitive buyers are seeing prices stay relatively flat." She added that "Overall, fewer markets posted year-over-year price declines in April than in prior months, pointing to continued stabilization across the housing market."
Shifting Market Dynamics and Inventory
While delistings signal seller frustration, there are also signs of shifting inventory and buyer activity. Signed contracts on existing homes, known as pending sales, saw a slight increase of 1.4% from March, according to the National Association of Realtors. This modest rise is likely attributable to an increase in available inventory, which was up nearly 6% from March. However, this also means that listings in some areas are starting to accumulate, with new homes entering the market while others linger.
Homes are generally sitting on the market for longer periods, leading some potential buyers to withdraw as the crucial spring selling season concludes. Interestingly, some homeowners who had previously pulled their properties off the market over the past year chose to relist them in April, according to Redfin. These sellers were likely hoping to capitalize on the spring market, even in the face of higher mortgage rates. The report indicated that 2.5% of the homes on the market in April were relistings, a share that ties with the previous two months for the highest since mid-2020, a period characterized by a sudden surge in housing demand. The current environment suggests a combination of seller expectations, buyer affordability, and evolving inventory levels.
