Even with mortgage rates coming down, creating a flurry of refinancing activity, home sellers are pulling back. August saw a 1.4% drop in active listings — while new listings dropped 1.1%, according to new data from Redfin. So, what’s behind some of these seller jitters?
Earlier this year, home buyers in many parts of the country were finally starting to feel the market tip in their favor.
“I think that that was around the time when sellers realized, ‘Hey, you know, we’re turning from a seller’s market to a buyer’s market right now,’” said Chen Zhao with Redfin.
Sellers who no longer had the upper hand in price negotiations got wise.
“[Sellers said,] I’m not getting the prices that I want, so a lot of sellers started pulling back. So since then, what we’ve seen is that new listings have started to decline,” Zhao said.
Sellers may be pulling back, but buyers aren’t. So, supply is starting to dwindle.
Real estate agent Amanda Snitker in Denver said working with sellers there has involved a lot of managing expectations.
“Their motivation to prioritize a quick sale is less,” Snitker said.
That’s because some sellers may have paid off a house, so they aren’t worried about it sitting on the market for a while if they can’t get full price.
“And so, they’re really hanging on to ‘this is what I think my house is worth. And I’ll sell it if someone wants to pay for it, and if they don’t, then it’s really no loss to us’,” Snitker said.
Others may have bought their homes more recently, when interest rates were lower, and want to get the most bang out of that buck in order to buy their next house.
“If they’re looking to move into a home with a 6.5% interest rate you know, 20 or 30% increase in value or mortgage amount makes a really big difference in monthly costs,” Snitker said.
This is also playing out in Chicago, where housing supply is quite tight.
“We have some sellers that don’t mind buying a new home and paying a higher interest rate, but they don’t know what they’re going to buy because we don’t have the amount of inventory that we need,” said Erika Villegas, with the Chicago Association of Realtors.
She said even though mortgage rates have gone down — she’s not confident another modest decline could spur a selling spree.