Home Listings Plummet as High Mortgage Rates Tie Owners Down

The number of homes for sale in the US fell to record low levels in May, according to real estate brokerage Redfin Corp., as high mortgage rates continue to deter people from moving.

(Bloomberg) — The number of homes for sale in the US fell to record low levels in May, according to real estate brokerage Redfin Corp., as high mortgage rates continue to deter people from moving.

Active listings fell 7.1% on a seasonally adjusted basis in May, and were down 38.6% from pre-pandemic levels, according to Redfin’s Housing Market Tracker. The brokerage said just 1.4 million homes were up for sale in May — lower than any month on its records, which date back to 2012. 

Many homeowners are opting to stay put as moving means giving up a cheaper mortgage. Rising interest rates pushed the average 30-year-fixed rate to 6.43% in May, Redfin said, up from 5.23% a year earlier, and more than double the 2.65% rate in May 2021.

The low number of homes for sale has driven price increases in some markets. Nearly half of Redfin’s offers were met with bidding wars in May, while more than two-thirds of homes sold went for above list price.

But new builds could help alleviate those high prices, and the listings scarcity. US housing starts unexpectedly reached their highest level since 2016 in May, according to government data. 

Existing home sales are set to be announced on Thursday. They likely decreased slightly in May to an annualized pace of 4.25 million, from April’s 4.28 million, according to Bloomberg Economics.

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