Rising mortgage rates move the needle on home shortage

For the first time in about 15 months, the number of homes listed for sale increased on an annual basis — albeit by a very small amount, Redfin reported.

New listings rose by 0.3% for the four weeks ended Oct. 22 compared with the same time frame one year ago; this is the first rise since July 2022.

With the 30-year fixed rate mortgage averaging close to 8% last week, many potential sellers have decided those are unlikely to decline by a significant amount anytime soon, Redfin said. Another factor might be the impact on prices.

"Some people are selling right now because they're concerned home values will go down, though that's definitely not a foregone conclusion," said Ali Mafi, a Redfin agent in San Francisco, in a press release. "Others are noticing an uptick in demand and testing the waters."

Pending home sales increased unexpectedly in September, a report from the National Association of Realtors noted.

However, those now moving to list need to be realistic about pricing. "Even though there are a few more buyers out there, this isn't 2021," Mafi said.

Approximately 6.8% of properties for sale reported a price drop during the four weeks ending Oct. 22, the highest share on record, Redfin claimed.

Still for the period, the median sales price was $369,975, up 3.1% over the prior year, while the median asking price rose 5.4% — the biggest increase in a year — to $384,375.

"Prices are up partly because elevated mortgage rates were hampering prices during this time last year," the Redfin press release said.

While active listings declined 12% from one year ago, to 841,697, this is the smallest annual drop since July.

The supply of homes for sale was 3.5 months, a 0.2 percentage point gain to the highest level since February, Redfin said.

The median time a home spent on the market was 33 days, a decline of 3 days, while the share of homes sold above list price 29.8%, up from 28% in August 2022.