Higher Rates Creating a Larger Housing Supply

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Real Estate

Buyers have a wider selection of homes to choose from today than a year ago, but rising mortgage rates remain a hurdle for many.

Homebuyers have a wider selection of homes to choose from now than they had a year ago, a trend that could help lead to more sales in a market still constrained by low inventory.

In the first four months of this year, active listings — a tally that encompasses all homes on the market except those pending a finalized sale — were the highest since 2020, according to Realtor.com.

The most recent monthly snapshot showed 734,318 homes on the market in April. That’s up 30.4% from the same month last year. New listings, meanwhile, jumped 12.2%.

However, the inventory of available homes remains well below the pre-pandemic era. In April 2019 there were roughly 1.1 million homes on the market, or over 400,000 more than last month.

The large gap between current mortgage rates and where they were just a couple of years ago has also discouraged many homeowners who locked in rock-bottom rates then from selling.

While home shoppers have more listings to choose from, high mortgage rates remain a hurdle for many.

“If mortgage rates remain elevated over the next few months, the housing market may see a return to the holding pattern of scarce inventory, as we’ve seen over the past few years,” Realtor.com economists wrote in a recent report. “For buyers, that could mean fewer opportunities for finding their ideal home as summer approaches.”