Homeowners who locked in ultra-low mortgage rates during the pandemic are finally putting their Homes on the market. But with home prices still sky-high and mortgage rates lingering around 7%, buyers aren’t exactly rushing in.
Pending home sales in January hit their lowest level on record at Redfin, aside from a brief dip in April 2020 when pandemic lockdowns froze the economy. Redfin’s data, which dates back to 2012, shows a significant drop in sales activity—even as more homeowners list their properties. Supply, however, is still far below pre-pandemic levels.
According to Redfin experts, this shift suggests that the so-called “lock-in” effect—where homeowners held onto their properties due to ultra-low mortgage rates—may finally be loosening. “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 Aren’t Homes Selling Right Now?
Typically, when more homes hit the market, it’s good news for buyers. But that’s not the case right now.
- Mortgage rates remain stubbornly high, hovering around 7%.
- The median home sales price is over $418,000.
- Buyers are hesitant, leading to homes sitting on the market for nearly two months—a five-year high, according to Redfin.
Winter is usually a slow season for real estate, but this January was particularly sluggish. Many potential buyers got cold feet, leading to 41,000 home-purchase agreements falling through—over 14% of all sales contracts, marking the worst January since 2017.
Some Good News for Buyers
For those willing to navigate today’s market, there are deals to be had. “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 this up. The firm reports that buyers had more negotiating power last month than in any January over the past five years. Sellers, meanwhile, appear more willing to slash prices to attract hesitant buyers. In fact, 23% of sellers cut their asking prices in January—the highest level on record for the month since Zillow began tracking in 2018.
Where Price Cuts Are Happening Most
Some markets are seeing even more dramatic price reductions:
- Phoenix: 33.5% of listings saw price cuts.
- Tampa, Florida: 32.4%.
- Jacksonville, Florida: 30.8%.
- Orlando, Florida: 29.1%.
- Dallas: 28.7%.
What’s Next for the Housing Market?
While inventory is increasing, high mortgage rates and steep home prices are keeping many potential buyers on the sidelines. Whether this trend continues into the spring remains to be seen, but for now, buyers have more room to negotiate—and sellers might have to come down on price if they want to close deals.
Thinking of Buying? Now Might Be the Time
If you’re looking to buy, this could be your window of opportunity. With sellers cutting prices and buyers hesitant, you may have the leverage to negotiate a better deal. Keep an eye on your local market, and don’t be afraid to make an offer below asking price—chances are, the seller might just take it.
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