New listings of U.S. homes fell the most since the depths of the Covid-19 pandemic in 2020 as sellers respond to deteriorating buying demand amid higher mortgage rates.
Specifically, new listings dipped 12% from a year ago during the four weeks ended August 7, the sharpest decline since June 2020, according to real estate brokerage Redfin's data , which covers over 400 U.S. metro areas. On a similar note, pending home sales, which tracks home sales in which a contract has been signed but the sale hasn't yet closed, slid 16% Y/Y.
Some homeowners appear to be hesitant to buy a new home since they would likely have to pay a much larger mortgage rate than they do now. For the week ended August 11, the 30-year fixed-rate mortgage jumped to an average of 5.22% from just 2.87% a year before.
At the same time, though, homebuyers seem to be pulling back as well amid an increase in the supply of homes. The total number of homes for sale is up 4% Y/Y, suggesting the housing shortage is starting to ease, Redfin said.
“Buyers are backing off due to rising housing costs and sellers are holding back because they realize they won't get the bidding war they would have gotten six months ago,” said Redfin Deputy Chief Economist Taylor Marr. “The good news is this is bringing balance to the market. If mortgage rates resume their downward trajectory, more buyers and sellers could get back in the game.”
Homebuilder stocks that could be impacted: D.R. Horton ( DHI ), KB Home ( KBH ), PulteGroup ( PHM ), Toll Brothers ( TOL ), Lennar ( LEN ), Beazer Homes USA ( BZH ) and Tri Pointe Homes ( TPH ).
Mortgage REITs: Annaly Capital ( NLY ), AGNC Investment ( AGNC ), Chimera Investment ( CIM ), Two Harbors Investment ( TWO ), Orchid Island ( ORC ), Dynex Capital ( DX ) and Ellington Financial ( EFC ).
Earlier this week, (August 10) mortgage applications show a surge in refi .
For further details see:
Newly-listed homes drop most since 2020 as sellers stay put - Redfin