More and more homeowners are staying put, choosing to stay in their current homes due to market conditions—something called the “lock-in” effect—so they can avoid paying a higher mortgage rate or paying an inflated price for a house.
According to Realtor.com’s April Housing Trends Report, the lock-in effect is having some serious consequences for the real estate market: in April alone, active inventory growth slowed for the second month in a row as newly listed homes fell 21.3% year-over-year, but still remains up overall.
Listing prices were also up slightly in April by 2.5%; annual listing price growth has decelerated for 10 months in a row now and could decline year-over-year by later this year.
"A lack of new sellers and homes for sale continues to limit buyers' choices and home sales. Many sellers are likely future buyers too, which may be why a majority of would-be sellers report feeling 'locked in' to their current home because of a low mortgage rate, especially younger homeowners," said Danielle Hale, Chief Economist for Realtor.com. "But older seller-buyers, who are likely to have a smaller mortgage balance and built up greater equity, are less likely to report feeling locked-in by a low interest rate and are more likely to report that they need to sell anyway. This likely means that older households will continue to play a prominent role on both sides of the home sale transaction this year."
A recent survey conducted by Realtor.com found that one-third of sellers (34.2%) said that finding a house to buy first before selling their home or not was a chief concern among those surveyed. Concerns about overall market conditions, including local demand and not receiving any good offers, was cited by 19% of surveyed respondents, the highest share since 2019, and nearly twice as high as a year ago. In addition, hoping to put their best foot forward in today's market, sellers say having to get their home market ready is also a top concern, especially given that high inflation rates are leading to higher improvement and household furnishing costs, and prices for those goods are rising more than prices overall.
"It's become increasingly challenging for many people to become homeowners, and longer-term homeowners who have built equity over many years are likely in the best position to sell and buy in today's market. To get top dollar for their home and set themselves up for success, all sellers still need to make sure their home is in the best possible condition and shows well. That could include making upgrades, investing in necessary repairs, and painting the home," said Realtor.com's Executive News Editor Clare Trapasso. "First-time and younger buyers can still win in this market by watching mortgage rates closely, setting online alerts for any new homes coming on the market, and working with an agent who really knows the market and how best to position an offer."
Click here to view the report in it’s entirety.