Mortgage applications were up 10% in March from the month before despite elevated borrowing costs and still-high home prices, but an uptick in buyer demand isn’t translating to increased sales. While house hunters are making a comeback to the for-sale market after months of hesitation in the midst of a housing correction, would-be sellers are still waiting it out on the sidelines.
A recent survey by Realtor.com revealed that more than three-quarters of sellers feel “locked in” to their home by low mortgage rates secured before a recent run-up in borrowing costs. As a result, more than half said they plan to wait until rates fall before putting their homes on the market, The New York Times reports.
A stalemate has mired the housing market, when it should be more robust. Sales of existing homes in March were down 22 percent from the year before, according to the National Association of Realtors. The inventory of unsold homes on the market at the end of March totaled 2.6 months’ supply, meaning it would take that long to sell them. Inventory is typically twice that amount to balance supply and demand.
“We are in a real gridlock situation,” said Robert Frick, corporate economist at the Navy Federal Credit Union. “It’s going to be a tortuous process to unfreeze the market and take a long time to get back to a normal supply-and-demand situation.”
Advertisement
Related Stories
Market Data + Trends
Vacation and Investment Home Market Insights
A recent report finds that beach homes are the most sought-after vacation-home type, and the investment potential of a second home is an important factor in homebuyers' purchasing decisions
Affordability
How Much Income Do First-Time Buyers Need to Afford the Average Home?
The median-priced home is unaffordable in 44 of the 50 largest U.S. metro areas
Affordability
What Is the Relationship Between Urban vs. Suburban Development and Affordability?
A new paper from Harvard's Joint Center looks at whether expanding the supply of suburban housing could, in turn, help make dense urban areas more affordable