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Nobody Is Buying Homes Right Now
By Adam Hardy MONEY RESEARCH COLLECTIVE
Despite rising home inventories, buyers are staying on the sidelines.
Homeowners who locked in ultra-low mortgage rates during the pandemic are finally ready to sell. But given staggering home prices and interest rates, Americans aren’t really in the mood to buy right now.
Pending home sales in January hit the lowest level on record at the real estate firm Redfin, aside from a one-month dip in April 2020 when pandemic-era lockdowns ground the economy to a halt. (Redfin’s data dates back to 2012.) This drop in sales activity is in spite of a wave of new home listings, although supply is still far below pre-pandemic norms.
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View RatesRedfin experts say this trend shows that homeowners who bought their homes or refinanced their mortgages during the pandemic — when rates were at an abnormally low 3% to 4% — are at last starting to sell. This so-called “lock-in” effect, which for years has contributed to a limited supply of homes on the market and elevated prices, is starting to fade.
“I’m seeing a lot more inventory hit the market than I have in past years, but it’s not nearly enough,” Charles Wheeler, a Redfin real estate agent in San Diego, said in the report.
Why homes aren’t selling right now
Normally, when a glut of houses come onto the market, that would be great news for would-be homebuyers.
With mortgage rates lingering around 7% and the typical sales price clocking in over $418,000, homebuyers just aren’t feeling all that excited. That one-two punch is keeping many buyers on the side lines. As a result, homes are sitting on the market for nearly two months, according to Redfin, notching a five-year high.
Of course, the colder months are usually slow to begin with for the housing market. But this January was particularly sluggish, with many buyers seemingly getting cold feet and backing out. Redfin estimates about 41,000 home-purchase agreements fell through last month. That equates to over 14% of all sales contracts — making for the worst January since 2017.
Still, for homebuyers willing to brave the housing market, some deals are out there.
“Buyers should know that they have a bit more negotiating power because there are more homes hitting the market,” Wheeler said.
Separate data from Zillow backs Wheeler up. Last month, the firm said, buyers had more negotiating power than in any January over the past five years.
And sellers seem more than willing to budge on price. According to Zillow, 23% of sellers slashed their asking prices last month, the highest level on record for January since the firm began tracking that rate in 2018.
Some more good news: The share of homes with price cuts is much higher in certain markets, including some popular ones.
For now, price cuts are most common in Phoenix (33.5%); Tampa, Florida (32.4%); Jacksonville, Florida (30.8%); Orlando, Florida (29.1%) and Dallas (28.7%).
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Adam Hardy is Money's lead data journalist. He writes news and feature stories aimed at helping everyday people manage their finances. He joined Money full-time in 2021 but has covered personal finance and economic topics since 2018. Previously, he worked for Forbes Advisor, The Penny Hoarder and Creative Loafing. In addition to those outlets, Adam’s work has been featured in a variety of local, national and international publications, including the Asia Times, Business Insider, Las Vegas Review-Journal, Yahoo! Finance, Nasdaq and several others. Adam graduated with a bachelor’s degree from the University of South Florida, where he studied magazine journalism and sociology. As a first-generation college graduate from a low-income, single-parent household, Adam understands firsthand the financial barriers that plague low-income Americans. His reporting aims to illuminate these issues. Since joining Money, Adam has already written over 300 articles, including a cover story on financial surveillance, a profile of Director Rohit Chopra of the Consumer Financial Protection Bureau and an investigation into flexible spending accounts, which found that workers forfeit billions of dollars annually through the workplace plans. He has also led data analysis on some of Money’s marquee rankings, including Best Places to Live, Best Places to Travel and Best Hospitals. He regularly contributes data reporting for Best Colleges, Best Banks and other lists as well. Adam also holds a multimedia storytelling certificate from Poynter’s News University and a data journalism certificate from the Investigative Reporters and Editors (IRE) at the University of Missouri. In 2017, he received an English teaching certification from the University of Cambridge, which he utilized during his time in Seoul, South Korea. There, he taught students of all ages, from 5 to 65, and worked with North Korean refugees who were resettling in the area. Now, Adam lives in Saint Petersburg, Florida, with his pup Bambi. He is a card-carrying shuffleboard club member.