1. New listings of existing homes on Zillow increased by 21% year-over-year in February.
2. Homeowners are showing signs of willingness to sell, suggesting a softening of the “lock-in” effect and frozen housing market.
3. Total inventory in February grew by 3.4% from January, with the largest increases seen in Dallas, Tampa, and Orlando.
Zillow reported a significant increase in new inventory hitting the housing market in February, with new listings of existing homes jumping 21% year-over-year. This data indicates that the “lock-in” effect and frozen housing market are starting to soften, potentially due to more sellers putting their homes up for sale.
Factors such as 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, where current owners are hesitant to move or refinance at higher rates, seems to be easing as more sellers enter the market. Homeowner surveys show a growing number of homeowners expecting to sell in the next few years, suggesting a shift in sentiment towards entering the market sooner rather than later.
Zillow also reported that total inventory in February increased 3.4% from January and had 12% more active listings compared to the previous year, with significant growth in markets like Dallas, Tampa, and Orlando. Despite average 30-year fixed mortgage rates edging higher to 7.02%, some strategists do not foresee a significant increase in homebuying activity even if rates were to decline. Rising home prices are expected to continue, with a forecasted 5% jump in house prices in 2024, leading to only a small increase in new resale supply entering the market over the next few years.