As the second quarter and spring home sales season come to an end, another major U.S. home listings platform has flagged declining seller activity as a potentially troubling sign for sales in coming months.

Taking seasonal factors into account, new listings fell 1.7% nationwide during the third week of June, according to Redfin. That pushed the company’s gauge of fresh for-sale supply to its lowest level since late February, before the Iran war erupted.

“Prospective home sellers are backing off partly because they notice soft homebuying demand,” said Dana Anderson, the report’s author. “Elevated rates are another reason new listings are declining.”

A seller retreat was also observed in a monthly housing report for May from Zillow, which described a potential June peak for listings as coming “early” in the year. The Redfin competitor said new listings were 4% lower in May compared to a year ago.

Slow homebuyer demand and elevated mortgage rates are ultimately two sides of the same coin for sellers.

Mortgage rates on typical 30-year home loans averaged 6.47% over the week ending June 21, according to Freddie Mac data. That’s below the 6.81% average over the same week last year, but well above the 6.01% rate posted in the third week of February.

With U.S. home sales structurally limited by entrenched mortgage rate lock-in effects, many sellers who would typically become buyers in a subsequent home sale are sitting on ultra-low, pandemic-era loans with mortgage rates of 4% or lower.

As rates have marched higher since the Iran war began, so has the cost of trading a subsidized pandemic-era mortgage for a market-rate loan today. This robs markets of another buyer and another seller, while suppressing available listings overall.

Redfin reports that total active inventory also declined over the third week of June, slipping 0.4% in its largest weekly decline since the end of April.

With high home prices, elevated mortgage rates and geopolitical volatility eroding consumer confidence, purchase demand has also waned as prospective homebuyers juggle a range of uncertainties. As markets turn buyer-friendly around the U.S., sellers have waited to list their homes out of fear they may be entering a saturated market.

But Redfin says local market conditions are shaping those dynamics. More buyers are including inspection contingencies in their offers, while half of sellers gave concessions to buyers in May, the highest-ever share for May in Redfin’s data.

“Of course, some homes are still competitive,” conceded Anderson. “The ones that are in the most desirable neighborhoods and in tip-top condition inspire bidding wars.”

Either way, contract activity in May suggests that buyer demand remains resilient.

The National Association of Realtors recently reported that pending home sales nationwide rose 4.2% from a year ago in May, but even those gains were heavily weighted toward more inventory-constrained markets in the Northeast and Midwest.

While the South and West observed respective annual increases in pending sales of 3.3% and 1.2%, the Northeast and Midwest lodged yearly gains of 6.1% and 9.3%.