More home sellers are taking listings off the market, Redfin says
Home Sellers Retreat as Market Cools, Adding to Housing Inventory Puzzle
The American dream of homeownership is facing a new layer of complexity as a growing number of sellers are pulling their properties off the market, unwilling to accept softening prices. This unexpected move is creating a peculiar situation in the housing market: inventory appears higher than a year ago, but the number of homes actually available to buy is shrinking.
Nearly 85,000 U.S. homes were withdrawn from listings in September, a 28% jump compared to the same month in 2023, according to Redfin. This marks the highest number of delistings for a September in eight years, signaling a significant shift in seller sentiment.
The Stale Listing Phenomenon
The primary driver behind this trend is the increasing length of time homes are staying on the market. Redfin data reveals that 70% of listings in September had been available for 60 days or longer – a stark contrast to the fast-paced sales seen in recent years. As homes languish, sellers are increasingly choosing to wait rather than lower their asking prices.
“The frequency of delistings is keeping inventory tighter than it looks on paper,” explains Asad Khan, a senior economist at Redfin. “When tens of thousands of homeowners pull their homes off the market rather than accept a low offer, it effectively reduces the supply of homes that are actually available for buyers. That keeps sale prices elevated.”
While the overall supply of homes for sale is approximately 15% higher than last year, according to Realtor.com, this figure is misleading. The wave of delistings is poised to counteract that increase, particularly as the market enters its traditionally slower winter months.
Price Adjustments and the Risk of Loss
Those sellers who are remaining in the market are often forced to make concessions. Zillow reports that the typical price reduction is around $10,000, but multiple cuts are becoming commonplace. In October, the average listing saw a cumulative $25,000 in price reductions – matching Zillow’s record for the largest discounts ever recorded.
This price sensitivity is particularly acute for those who purchased homes during the peak of the market. Roughly 15% of homes delisted in September were at risk of selling at a loss, the highest percentage in five years, according to Redfin. This highlights the vulnerability of recent homebuyers facing a cooling market.
Globally, housing affordability is a growing concern. According to a United Nations report released in October 2023, housing costs now consume, on average, 40% of household income in major cities worldwide, leaving less disposable income for other essential needs. This trend is exacerbating inequalities and hindering sustainable urban development.
A Temporary Pause, or a Longer Trend?
While approximately one in five delisted homes are eventually relisted, many sellers are likely to hold off until the spring, when market activity typically picks up. This strategic pause could further constrain inventory in the short term.
Despite these challenges, home prices remain significantly higher than they were just five years ago – up around 50%. October saw a modest 1.9% increase in pending sales (based on signed contracts) compared to the previous month, potentially fueled by a temporary dip in mortgage rates, according to the National Association of Realtors. However, rates have since risen again in November, potentially dampening buyer enthusiasm.
The Broader Economic Context
The housing market’s current predicament is inextricably linked to the broader economic landscape. Weak buyer demand, coupled with economic uncertainty, is contributing to the slowdown. The Federal Reserve’s monetary policy, aimed at curbing inflation, has significantly impacted mortgage rates, making homeownership less accessible for many.
The Bureau of Economic Analysis reported that residential fixed investment – a key component of GDP – has been declining for several quarters, indicating a slowdown in housing-related economic activity. This trend underscores the sensitivity of the housing market to macroeconomic conditions.
This situation isn’t unique to the United States. Many countries are grappling with similar challenges, including rising interest rates, affordability concerns, and slowing construction activity. The global housing market is facing a period of adjustment as it adapts to a new economic reality.
For prospective homebuyers, patience and careful consideration are crucial. For sellers, understanding the current market dynamics and being realistic about pricing expectations are essential. The housing market is in a state of flux, and navigating it successfully requires a nuanced understanding of the forces at play.
ARTICOL ORIGINAL:
Weak buyer demand, weakening home prices and overall uncertainty in the economy are combining to make home sellers change their minds and step out of the market.
Close to 85,000 U.S. sellers took their homes off the market in September, up 28% from September 2024 and the highest level for that month in eight years, according to Redfin.
Sellers are delisting because so many listings are going stale, sitting on the market longer and longer. Redfin reported that 70% of listings in September were on the market for 60 days or longer.
Homeowners are seeing prices weaken significantly and would rather wait than accept a low offer. Prices in September were 1.3% higher year over year, down from a 1.4% rise in August, according to the S&P Cotality Case-Shiller U.S. National Home Price NSA Index.
“The frequency of delistings is keeping inventory tighter than it looks on paper,” said Asad Khan, a senior economist at Redfin. “When tens of thousands of homeowners pull their homes off the market rather than accept a low offer, it effectively reduces the supply of homes that are actually available for buyers. That keeps sale prices elevated.”
Some sellers are lowering prices — even multiple times. The typical price cut is roughly $10,000, but multiple reductions are becoming more common as homes take longer to sell, according to Zillow. The typical listing saw $25,000 in cumulative price cuts in October, matching the largest discounts Zillow has ever recorded.
The housing market is now heading into its slowest season. While 1 in 5 homes that are delisted are relisted, that may not happen for several months, as sellers will likely wait for the much busier spring season to try again.
Home prices are still 50% higher than they were just five years ago, but some sellers who bought in the last few years are facing potential losses. Roughly 15% of the homes that were delisted in September were at risk of selling at a loss, the highest share in five years, according to Redfin.
The supply of homes for sale is about 15% higher now than it was a year ago, according to Realtor.com, but that is likely to shrink in the coming weeks, both because of the season and because of weakening consumer sentiment among buyers and sellers alike.
Pending sales in October, which are based on signed contracts, were up 1.9% month to month and basically flat from a year ago, according to the Realtors. The monthly bump may have been due to a small drop in mortgage rates, which then turned higher again in November.