Housing Supply Reaches Highest Level Since Early Pandemic, According to Report
Statistics indicate that a typical home sold in January remained on the market for an additional week compared to the previous year.
According to data from real estate brokerage Redfin, the availability of homes for sale in the United States increased last month compared to the same time last year; however, buyer interest has diminished due to high costs.
New listings were also up, rising by 4.7 percent on an annual basis and marking the highest level since July 2022. In contrast, pending home sales plummeted by 6.3 percent year-over-year, reflecting a drop in demand. Redfin indicated that pending sales have reached “the lowest level on record aside from the onset of the pandemic.”
While a significant influx of inventory is entering the market compared to previous years, “it’s still not sufficient,” commented Charles Wheeler, a Redfin Premier real estate agent based in San Diego.
“Many homeowners are expressing concerns over economic uncertainties. I’ve heard from sellers stating, ‘I feel we’re at the peak of the market—I’m ready to cash out and reinvest,’” he remarked.
“Buyers should be aware that they possess increased negotiating power due to the higher number of homes entering the market. Sellers, on the other hand, should consider that with buyers having more leverage, ensuring their home is in prime condition and competitively priced is essential for a quick sale.”
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Redfin explains that the increasing housing supply is partly due to the waning mortgage rate “lock-in” effect, where homeowners hesitate to sell due to lower mortgage rates on their current properties. Selling at this time may involve buying at higher mortgage rates, resulting in an increased financial burden.
Furthermore, homes are taking longer to sell, with a typical home sold in January spending 56 days on the market, which is one week longer than the previous year.
Redfin attributes the decline in housing sales to several factors including high interest rates and economic uncertainty.
Last month, the average interest rate for a 30-year fixed mortgage was 6.96 percent, the “highest level since May.” Additionally, the median home price increased by 4.1 percent year-over-year to $418,581, which is “45 percent higher than January prior to the pandemic.”
Economic uncertainties are further compounded by potential tariffs and reductions in the federal workforce.
“I’ve had numerous meetings with potential sellers recently. While listings usually rise in March or April, this year things seem to be progressing sooner,” shared Fernanda Kriese, a Redfin Premier agent from Las Vegas.
“Some sellers are motivated to list because they bought their homes just a few years back and their values aren’t appreciating as fast as they expected, prompting them to cut their losses and relocate to a more affordable property. Others are retirees looking to downsize.”
Market Sentiment
A market survey conducted by Bright MLS on January 23 revealed that while optimism regarding buyer activity has increased last month, the sentiment “isn’t as strong as it was during the same time last year.”
Despite the U.S. Federal Reserve lowering rates in December 2024, mortgage rates have continued to rise. Consequently, expectations for the housing market in early 2025 have been “moderated.”
“In 2025, buyers may find themselves with more negotiating power, but compromise is crucial for the market’s progression,” the company noted.
“In December, 36 percent of agents with successful buyers reported that their clients had to make some sort of compromise, whether that involved accepting a home as-is, offering above listing price, or purchasing a smaller property.”
“President Trump acknowledges that the nation is facing a housing affordability crisis, and the only viable solution is to eliminate barriers such as unwarranted and expensive regulations that inflate housing costs and hinder builders from creating more affordable housing options,” stated Harris.
