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The Biggest Hurdle for Housing Is Seller Hesitation, Experts Say

Market Data + Trends

The Biggest Hurdle for Housing Is Seller Hesitation, Experts Say

Elevated borrowing costs are currently affecting both homebuyers and sellers, with buyers hesitant to spend and sellers unwilling to list and sacrifice the lower rates they've locked in on their current homes

June 1, 2023
Dominoes falling on white house with blue background
Image: BAyram / stock.adobe.com

The housing market is currently facing a “chicken and egg” problem, according to Insider, whereby elevated mortgage rates are keeping both homebuyers and sellers sidelined, which is, in turn, resulting in a dearth of for-sale inventory. As a result, those who can afford home purchases can’t find homes available to buy. Total listings of both new and existing homes are up 23.4% compared with last May, but those homes are staying on the market for a median of 43 days, which is roughly two weeks longer than they were staying on the market a year ago.

As for-sale inventory dries up and sellers remain unwilling to sacrifice their ultra-low mortgage rates to refinance in today’s high-cost market, experts say home price growth will likely slow during the months ahead.

"Based on current trends, it's possible that [home prices] won't hit the previous year's peak for the first time in our data," said Sabrina Speianu, economic data manager at Realtor.com.

Again, this comes back to still-high mortgage rates. If they remain hovering in the 6% or 7% range, home prices may eventually have to fall down to compensate. Buyers have been getting slammed by the current combination of high rates, high prices, and low inventory.

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