Sellers Retract Listings At Record Pace

Sellers Retract Listings At Record Pace

A new development in the real estate market of 2022 is that we are seeing sellers retract listings at a record pace. As we continue to see the downfall of the pandemic boomtowns, real estate prices, listings, and buyer demand are all decreasing. This is largely due to the historic increase in real estate financing rates and a slowdown in buyer economic activity. There has been a record number of homes taken off the market as sellers retract listings for these reasons above. Concerning? It could be. Let us go over what sellers retracting listings means for the real estate market.

Shifting Market Sentiment

As we continue to face a sharp decline in demand, we are seeing sellers become more flexible in order to get deals worked out. However, some of these sellers are growing impatient or concerned over the market which causes sellers to retract their listings. On average, we have seen 2% of homes that were listed become delisted without being sold. This is 2% each week during the previous 3 months that ended in November 2022. This compares to only 1.6% of listings in that same period a year earlier and shows signs to the decades-long housing boom is ending.

Reasons Sellers Retract Listings

In a complete 180 from the pandemic buying frenzy, where sellers were listing more houses than ever, sellers are now withholding from the market. Demand has slumped as mortgage rates head towards their highest levels since The Great Recession. With a slight dip in borrowing costs in recent weeks, we would expect to see an increase in buyer demand. However, sellers are pulling listings and buyers are not showing up as they have before. Many potential buyers are sidelined until the shockingly volatile mortgage rate market can settle and pick direction. This is another reason that sellers retracted listings at record paces recently.

One of the biggest problems in the housing market this year is the attitude of sellers. Most sellers have been convinced, whether by themselves or a third-party, that their home is a diamond-in-the-rough and worth 2021 prices. However, unfortunately for sellers, the craziness of the pandemic housing market is likely over. This is especially true for buyers, as prices, rates, and supply has squeezed their options recently. Now, buyers have self-selected out of the market in a lot of issues that seemed irrelevant even just 9 months ago.

Recession Fears

As fears of a Federal Reserve caused recession continue to grapple the minds of buyers, sellers, investors and anyone in-between, housing will likely continue to remain hard to predict. For the first time in a generation, the housing market has volatility not typically seen or associated with the housing market in the U.S. As we see more buyers leaving the market alongside sellers, we will likely see some sort of more drastic shift in economic trend. This shift could be seen in many different ways, and one is already being shown.

Housing prices have decreased month-over-month for the first time in over 14 years. That is a sign of the changing times in the real estate market. And while this decrease in housing prices does nothing to balance out the price increases from the pandemic, there may be a time in the future where they do. In some markets, according to agents and NAR (National Association of Realtors), entry level housing is requiring 10-15% price cuts to sell. This is not a good sign for sellers, or the sustainability of the real estate market. As sellers retract listings at a higher rate than ever before, we could see a balancing act between too low supply and too moderate of supply. This will likely keep prices elevated, but not rising.