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For the first time since July 2022, new home listings have posted an annual increase, rising 0.3% during the four weeks ending October 22. This shift indicates that some sellers are no longer waiting for mortgage rates to drop and are instead motivated by concerns that home prices may decline if they delay further. While the increase is modest, it represents a significant change in seller behavior after a prolonged period of contraction, offering a glimmer of hope for buyers who have faced extremely limited inventory.
The primary driver behind this increase appears to be seller fatigue with the high-interest-rate environment. With mortgage rates—the interest rate charged on a home loan—remaining elevated near 8%, many homeowners are accepting that a significant decrease is unlikely in the immediate future. These sellers are ultimately deciding to part with their existing homes, many of which have comparatively low mortgage rates from purchases or refinances years prior. Concurrently, another segment of sellers is growing anxious that tepid demand could lead to falling home prices, prompting them to list their properties now to capture current market value.
Buyers are cautiously welcoming the slight increase in options, though overall market activity remains subdued. Mortgage-purchase applications, a measure of how many people are applying for loans to buy a home, fell to their lowest level in nearly 30 years. However, there are signs of life. Pending home sales, which represent homes under contract but not yet closed, saw their smallest annual decline in a year and a half. This suggests that while many potential buyers are priced out, a determined cohort is actively searching and making purchases when they find appropriately priced homes.
The strain of high prices and high rates is directly impacting listing strategies. To attract buyers in this challenging affordability environment, a record share of sellers are adjusting their initial asking prices. Approximately 7% of U.S. homes for sale had a price drop during the four weeks ending October 22. This is the highest percentage on record, indicating that sellers are becoming more realistic about pricing to secure a sale in a market that is no longer the frenzied seller's market of 2021.
| Metro Area | Price Change (%) |
|---|---|
| Newark, NJ | +13.0% |
| Anaheim, CA | +12.2% |
| New Brunswick, NJ | +11.4% |
| San Jose, CA | +11.0% |
| Fort Worth, TX | -2.2% |
| Houston, TX | -1.6% |
| San Antonio, TX | -1.6% |
Table showing year-over-year median sale price changes in select metros. Data reflects a four-week period ending October 22.
Based on our experience assessment, the key for sellers is to align expectations with current market realities. While demand has ticked up slightly, it does not resemble the competitive environment of recent years. "Price your home fairly so it will sell as fast as possible," is the prevailing advice from industry professionals. Sellers who set a competitive price from the outset are more likely to attract the limited pool of serious buyers and avoid multiple price reductions, which can stigmatize a listing.
The recent uptick in new listings marks a notable shift in the US housing market, driven by sellers adapting to a new normal of higher mortgage rates. For buyers, this translates to slightly more choice, but affordability remains a significant hurdle. For sellers, success hinges on realistic pricing and an understanding that the market dynamics of 2021 are firmly in the past. Monitoring local market data, including the rate of price adjustments and pending sales activity, is crucial for making informed decisions whether buying or selling.
