- Zillow reported that a wave of new inventory hit the market in February.
- New listings of existing homes on Zillow jumped 21% year-over-year last month.
- The data suggest the "lock-in" effect and frozen housing market are softening.
High mortgage rates, elevated home prices, and tight inventory have kept many Americans sidelined from the housing market since the pandemic.
However, the "lock-in" effect — current owners being unwilling to move or refinance at higher rates — is showing signs of easing as more sellers begin to put their homes up for sale. Zillow data out Thursday showed new listings of existing homes jumped 20.8% in February compared to the same time in 2023, and climbed 20.3% month-over-month.
Not only that, but homeowner surveys suggest an increasing share of homeowners expect to sell in the next three years, which suggests some households may be done waiting for rates to drop before they wade back into the market.
Zillow reported that total inventory in February climbed 3.4% from January and that there were 12% more active listings last month compared to a year ago.
Inventories grew the most in Dallas (38.8%), Tampa (30.7%), and Orlando (29.5%), and rose in 33 of the largest 50 US markets.
On Thursday rates on the average 30-year fixed mortgage edged higher to to 7.02%.
Even if mortgage rates decline this year, strategists at Capital Economics aren't anticipating a meaningful uptick in homebuying activity. In fact, they don't foresee an end in sight for rising prices in the near term, forecasting a 5% jump in house prices in 2024, above the consensus 3%.
"Even if mortgage rates fall to 6% as we expect, mortgage rate 'lock in' will continue to curb home moves," the strategists said. "As a result, we only anticipate a trickle of new resale supply coming onto the market over the next few years."