More homes are up for sale this spring, but rising rates could keep buyers on sidelines
The housing market’s spring selling season could be more robust this year as inventory picks up steam.
A new report from Realtor.com shows that the number of homes actively for sale in February jumped 14.8% compared to the same month last year. That’s the fourth consecutive month of increases for homes listed for sale on the market.
“The fact that we’re starting the year with more homes for sale than we’ve seen on the market since 2020 is a really good step,” Danielle Hale, chief economist of Realtor.com, told Yahoo Finance in an interview.
“We’ve called this season potentially promising. It is early in the year, but it’s a promising start,” she added.
Meanwhile, new listings from sellers just entering the market jumped by 11.3% in February compared with last year.
More inventory means more options for buyers — that’s good news for those looking for a home.
To be sure, inventory is still down nearly 40% compared to pre-pandemic levels. Another challenge for buyers this selling season: Borrowing costs are ticking back up. The average for a 30-year fixed loan was 6.94% as of last Thursday, up from 6.9% the prior week, Freddie Mac said in a statement.
Mortgage rates are expected to decline this year as the Federal Reserve cuts interest rates. However, the central bank’s timeline for the first cut has been in question following the release of hotter-than-expected January inflation data.
Read more: Mortgage rates hover around 7% — is this a good time to buy a house?
Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that interest rate cuts are likely “at some point” this year.
Realtor.com acknowledged the uncertainty in its report, noting: “Consistently strong economic and labor market conditions and an uneven decline in inflation have pushed the Federal Reserve Board into a wait-and-see approach to determine the best timing for future rate cuts, a factor driving increased mortgage rates in late February. This, coupled with less positive February pending data, could mean slower seasonally adjusted sales heading into the next couple of months.”
Meanwhile, don’t expect home prices to increase dramatically. In February, the median list price inched up by just 0.3% compared with last year.
“Our 2024 housing forecast [anticipates] that home prices are actually going to decline very slightly,” Hale said. She still expects to see the usual seasonal ramp-up, but not much growth beyond that.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.