A Wednesday report from Zillow states that its seen a nationwide increase in homeowners looking to sell, but that potential buyers aren't biting yet.
AUSTIN (KXAN) — A Wednesday report from Zillow states that its seen a nationwide increase in homeowners looking to sell, but that potential buyers aren't biting yet.
Many homeowners who bought homes or refinanced during the COVID-19 pandemic could take advantage of a historically low prime rate. But this tightened the national housing supply in 2022, due to "rate lock" -- when homeowners don't want to lose already negotiated low mortgages.
“Rate lock’s hold seems to be loosening — homeowners who may have put off listing their homes are done waiting. But just as more choices sprang up for sale, buyers turned on cruise control,” said Zillow senior economist Orphe Divounguy.
The national trend is also happening locally. According to the Austin Board of Realtors, the Austin-Round Rock Metro reached four-months of supply in April and nearly crossed the five-month mark in May.
“This data demonstrates that buyers can continue to be more selective when searching for a home in their price range,” said ABoR economist Dr. Clare Losey in a statement. “Although it may appear to be a buyer’s market from the outside, it’s important to understand the context behind these statistics, including higher interest rates resulting in a reduction in purchasing power.”
Zillow currently calls the local market "neutral," but that it switched in May to a buyer's market. Inflation may be to blame for buyer reluctance; as the prime rate rose through 2023, inflation also increased.
“Inflation has hit younger households hardest, and stubbornly high rates have pushed a mortgage out of reach for many first-time buyers. That has cooled competition for houses," Divounguy said. "If these trends hold, we’re likely to see price growth flatten or tick down over the next year.”
The decreased competition means that asking prices for homes are also dropping. According to Zillow, 31% of listings in Austin received a price cut -- more than in 2023. Home values are also down 4.1% in the metro, the second-biggest drop in the US.
"Prices are coming back to earth for prospective buyers," said a Zillow PR representative.
