More and more sellers are throwing in the towel. For the first time in two years, the number of homeowners pulling their houses off the market is falling, real estate brokerage Redfin reports.
About 14,000 sellers dropped out of the market over the past two months. But as of July, there were still 1.95 million owners actively trying to sell their places, which is down from 1.96 million in May.
“Some sellers are de-listing their homes or choosing not to list at all after seeing other houses sit on the market for weeks or months, only to fetch less than the asking price,” stated Redfin Senior Economist Asad Khan.
The May-July dropoff is the largest decline since July 2023, when the inventory of houses for sale bottomed out near “a historic low” and rising loan costs started to give sellers pause.
However, the number of houses for sale is likely understated, because newly constructed houses are not normally counted in local multiple listing services, which is where Redfin takes its figures. And builders also are struggling to find buyers.
Sellers outnumber buyers by the widest margin in records dating back to 2013. An estimated 1.43 million buyers were looking for houses in July. Aside from during the pandemic, when the market almost ground to a halt, that’s the lowest number of buyers on record.
With sellers pulling back, inventory is starting to tick down, which Redfin notes is likely why home prices are still rising — even if ever so slightly.
The median selling price nationally rose 1.4% year-over-year in July to $434,189, the highest July median on record. By comparison, prices rose 1.2% year-over-year in June and 1.1% year-over- year in May. At the beginning of the year, prices were shrinking.
Redfin gauges that there are 36.3% more sellers in the market than buyers — 518,801 more, to be exact. That’s the largest gap since the start of record-keeping a dozen years ago, making it a buyer’s market, at least nationally and in most large metro areas.
“We’re likely in the most buyer-friendly housing market since the 2008 financial crisis,” economist Khan said. Of course, the realty brokerage points out, it’s only a buyer’s market for those who can afford to buy.
Overall, 35 of the 50 most populous metros are buyer’s markets, 10 are balanced, and five are seller’s markets. The buyer’s markets are concentrated in the Sun Belt and on the West Coast, while balanced markets and seller’s markets skew more toward the Midwest and East Coast.
With more than twice as many buyers and sellers, Miami and Fort Lauderdale, Fla. are the best buyer’s markets. But with half as many sellers as buyers, Newark, N.J. and Nassau County, N.Y. remain the strongest metros where sellers are still in the driver’s seat.
The other areas where sellers hold the strongest hands are Montgomery County, Pa., New Brunswick, N.J., and Minneapolis.
Unrealistic Expectations
Jesse Landin, a Redfin agent in San Antonio, described the situation in his market.
“Buyers are patient, selective, value-conscious, and aware of their increased negotiating power. When they make offers, they ask for the moon,” he said.
Sellers, on the other hand, “are struggling to adapt,” Landin said. “Their expectations are anchored to 2021, when homes were flying off the market for thousands of dollars over the asking price. A growing number are exploring alternatives. Some are entertaining low-ball offers from investors or even foreclosure.”
“Others are considering pulling their home off the market and becoming a landlord,” added Landin, “if they don’t achieve their desired asking price.”
When builders are thrown into the mix, the pressure on sellers is even greater. “If your house was built three years ago and has the same floor plan as a new-build down the road, you have to list it for less, especially because builders are offering all sorts of powerful incentives to woo buyers,” Landin contended.
