New Listings Rise Substantially From Last Year

Softening rates are at least partially removing the "golden handcuffs"

I’ve talked before about the “golden handcuffs” that have buttressed the real estate market ever since the Federal Reserve jacked interest rates up in the second half of 2022. Basically, because home owners had bought houses with interest rates between 2 and 4 percent and rates were now between 6 and 8 percent, they couldn’t buy anywhere near as nice a house if they sold and relocated.

So they were stuck.

Stuck with an incredible mortgage in whatever house they currently lived in. Thus, the “golden handcuffs.”

One working paper from the Federal Housing Finance Agency even concluded that “This mortgage rate lock-in led to a 57% reduction in home sales with fixed-rate mortgages in 2023Q4 and prevented 1.33 million sales between 2022Q2 and 2023Q4.”

Now the Fed has finally cut the federal funds rate 50 basis points, its first cut in over two years.

And all of a sudden, rates are (sort of) competitive again. I even heard of someone getting a loan in the 5s although I did not see it confirmed so I consider that just a rumor.

But the impact of these relatively lower rates is clear, more people are now trying to sell. As Realtor.com notes,

“…sellers stormed back this September as newly listed homes were 11.6% above last year’s levels and a significant reversal from August’s 0.9% decrease.”

The chart they provide for active listings clearly shows that 2024 is not only seeing many more listings than 2022 or 2023, but also bucking the seasonal trends as active listings continue to rise despite tending to fall in the fall and winter months.

Realtor.com

Now we’ll see whether buyers want to actually take advantage of those (again, relatively) lower rates…

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