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.”