Housing market competition cools off, opening up more inventory and slowing down prices
- Competition in the housing market is easing faster than normal this fall, a Zillow report said.
- The "rate lock" that kept potential sellers on the sidelines because of high mortgage rates is abating.
Competition in the housing market is easing faster than normal, as home prices ticked lower last month and inventory loosened up, Zillow said Thursday.
Home values fell by 0.1% in September from August, with Zillow noting that even a small monthly decline is unusual for this time of year. And nearly a fourth of home listings in September saw a price cut, higher than previous years.
"Mortgage rates approaching 8% are taking the wind out of the market's sails, pushing monthly mortgage payments beyond many buyers' budgets," said Jeff Tucker, Zillow senior economist. "While attractive listings are still moving at a brisk clip, competition among buyers is fading quickly due to the shock of mortgage rates on top of normal autumn seasonality."
The data come after other signs pointed to improvements in housing inventory and an uptick in sellers lowering their asking price.
Mortgage rates at 22-year highs have shoved many homebuyers — and sellers — onto the sidelines, because nobody wants to give up the low rates they secured earlier.
This "rate lock," however, might be abating, the Zillow report stated, as sellers may not be able to afford a delay any longer.
As a result, total listings rose by 0.2% on the month. And while new listings dropped 6%, but it's not nearly as steep as the 13% average decline that was seen in 2018 and 2019.
Separate data from Redfin showed new listings of US homes for sale have ticked up 2% since the start of September, as the typical summer-to-fall seasonal weakness didn't materialize.
And the Mortgage Bankers Association said this week that mortgage rate applications inched upwards too.