As the saying goes, “If the groundhog doesn’t see its shadow, spring arrives early,” and it seems this might hold true for the housing market. The latest data from Realtor.com® indicates a largest surge in new listings in three years of the once-frozen market, with a remarkable 12.8% increase in new listings for the week ending Feb. 3.
According to Realtor.com economist Jiayi Xu, this marks the most substantial jump in nearly three years, signaling a potential shift in the real estate landscape.
A crucial factor contributing to this surge is sellers closely monitoring mortgage rates, which have remained stagnant in the mid-6% range for the past two months. Despite a decrease of about 1 percentage point from last fall’s peak of 7%, sellers are seizing the perceived stability before any potential uptick in rates.
This strategic move aligns with a fall 2023 rate in the high 7% range – the highest in 23 years – which had many homeowners reluctant to give up their low existing rates and venture into a market with substantially higher loan rates.
While mortgage rates have been a central focus, median home prices have displayed a pattern of fluctuation, rising and falling without making significant waves. According to Xu, home prices have been in a holding pattern since May 2023, with minimal deviation from prior-year levels, ranging from -0.9% to +2.2%. The median home list price for the week ending Feb. 3 was 0.9% higher compared to the same week last year, with the January median home list price at $409,500.
One positive aspect for potential buyers is that median home prices are not growing as rapidly as seen in previous years. However, the market still faces challenges, as the boost in homes for sale, while welcomed, is still 40% lower compared to the pre-COVID-19 years between 2017 and 2019.
Xu emphasizes the delicate balance between supply and demand, warning that the persistent low inventory could drive home prices higher, as sellers take advantage of limited options.
Buyers are evidently responding to the surge in new listings, with the average days a typical home spent on the market for the week ending Feb. 3 being three fewer than the same week a year ago. This increased activity suggests a growing interest in the market, driven by the influx of fresh listings.
Despite the optimistic boost in listing activities, Xu advises caution, stating that additional data points are necessary to confirm whether sellers are responding promptly and to assess the sustainability of this notable improvement.
The housing market’s future remains uncertain, with potential price trends contingent on the delicate interplay between supply and demand. While encouraging, market participants await further data to ascertain the longevity of these positive trends in the real estate landscape.