“Quietly quit” the US housing market: A group of sellers has disappeared

New listings are down 21% year-over-year, according to Realtor.com (via Getty) Getty Images

The housing market’s big spring season has arrived, but not many homes are put up for sale.

According to Realtor.com (see chart below), only 392,016 U.S. homes were listed for sale in April 2023. That’s below the 497,844 listed in April 2022 — a period notorious for its tight supply — and well below the 552,082 that were listed in April 2019.

Redfin’s chief economist Daryl Fairweather perhaps summed up the phenomenon best when she tweeted last week: “Homeowners are quiet and leaving the housing market.”

Fairweather is a little tongue-in-cheek when she calls for quiet quits — which refers to employees doing minimal work — to describe the lack of new inventory. Having said that, she is on to something: High mortgage interest rates have coincided with less relocating sales/purchases.

As Fortune has previously explained, it just doesn’t make a lot of financial sense for someone with a 2% or 3% mortgage rate — one of the biggest economic benefits of the pandemic — to sell their home and then try to buy a new home at a 6% mortgage rate . If they did, they would have a significantly larger monthly mortgage payment.

Note that many potential move-up buyers choose to stay, and fewer homes come on the market.

The withdrawal of sellers/buyers who move up is not only felt on the supply side, it also gives a hit on the demand side. See, if a particular homeowner decides to wait to shop for properties, that means there is one less home on the market and one less buyer on the market.

So do buyers or sellers have the upper hand?

Unlike new entry total (ie the number of homes that come on the market in a given month), the active listing total (ie total holdings on the market) is a better indicator of the balance in a market at any given time.

While April 2023 saw 21.2% fewer US homes for sale (i.e. “new listings” shown in the chart above) compared to the same month a year earlier, there are actually 49.3% more homes available for sale (i.e. “active listings ” shown in the chart below) in April 2023 than in April 2022. The reason? Last year’s mortgage rate hike kept homes on the market longer as days on the market increased, allowing inventory to pile up even as fewer homes came up for sale.

However, we are still very far from a national buyer’s market. In fact, active listings (ie inventory) in April 2023 were 50.3% below April 2019 levels.

In theory, a market with inventory above pre-pandemic levels has seen the power dynamic shift dramatically in buyers’ favor. Markets with inventory levels well below pre-pandemic levels, on the other hand, have seen less dramatic changes.

The searchable chart below provides active listings/inventory data for the country’s 100 largest housing markets.

Among the nation’s 100 largest housing markets, only one (the declining Austin housing market) is back to pre-pandemic (ie, 2019) inventory levels.

Meanwhile, the other 99 major markets are still below their April 2019 inventory levels. That includes places like Hartford, Connecticut (down 79.7%) and Bridgeport, Connecticut (down 77.6%).

Do you want to stay up to date on the housing market? Follow me on Twitter at @NewsLambert.