IP Galanternik DU/Getty Images
- Fewer people are sitting on their mortgages as they adjust to higher rates, according to Redfin.
- New listings jumped close to 15% in February, the biggest year-over-year increase since 2021.
- Still, this isn't translating to lower prices, which climbed 6.6% on an annual basis.
US home-sellers are finally getting accustomed to higher mortgage rates. That's driving momentum in housing-supply growth and helping alleviate an inventory shortage, Redfin wrote in a new report.
New listings surged 14.8% on an annual basis in February, marking the highest year-over-year gain since May 2021. Month-to-month listings rose 3.8%, hitting the highest levels since September 2022.
"The housing market is nothing like it was two years ago during the pandemic homebuying frenzy, but it's better than it was last year. It's coming back," Redfin premier real estate agent David Palmer said in the report. "Sellers who were on the fence in 2023 are now listing. They're more used to elevated rates now."
Mortgage rates have been a point of distress for homeowners looking to sell, as many originally bought their homes when rates were well below current levels.
As monetary policy tightened sharply in the pandemic's aftermath, mortgage rates jumped as much as 8% last year, pulling owners off the market.
With the weekly 30-year fixed mortgage rate now at 6.74%, this homeowner "lock-in effect" is easing, Redfin said. But although that's boosting housing supply, it hasn't translated into a meaningful rebound in home buyers.
Mortgage-purchase applications declined through February, as rates rose from early 2024. While mortgage rates are moving back down from last month's 6.78% average, they are likely to remain elevated for longer, Redfin said.
Meanwhile, home sales fell 3.5% year-over-year, while median sale price jumped 6.6% on an annual basis. That's as demand is still well above available supply.
Between mortgage rates and higher prices, the median US monthly housing payment stood $2,686 through February, just $30 below last year's all-time high.
Recently, the supply-demand imbalance has gotten the attention of the White House, who issued a 10-point plan on how to relieve the market. Proposed initiatives include mortgage-relief credit for first-time homebuyers, as well as legislative incentives to add 2 million homes.