With mortgage rates no longer locked on an upward trajectory, more homeowners appear to be clawing out from under the shadow of the lock-in effect, according to a new report from Zillow.
A Q4 2023 survey from the real estate marketplace found that 21% of homeowners are considering selling their homes within the next three years, up from 15% one year prior.
Moreover, the survey found that the share of homeowners considering selling their home was virtually the same whether the interest rate on their mortgage was above or below 5%. Consider that just six months prior, homeowners with rates above 5% were almost twice as likely to consider selling than those with rates below that threshold.
More homeowners, even those with low rates, are apparently warming to the idea of selling, and the current mortgage rates, which remain above 6.5% even though they’ve eased of late, appear to be shrinking as a barrier, at least psychologically.
An increase in homeowners deciding to list their houses is helping relax ongoing supply woes, though the drip is slow. Per Zillow’s figures, inventory grew annually in December for the first time since April. Inventory levels, according to Zillow data, are now 36% below pre-pandemic averages — not an ideal level, but closer to equilibrium than the 46% deficit in May 2023.
The recent easing of rates has helped on the buyer side as well, with monthly mortgage payments on a typical home now at $1,790, or $143 less than they were in October, according to Zillow. Taking the national average into account, it’s the first time since April last year that a new mortgage with a 20% downpayment eats up less than 33% of the median household income.
“Buyers found significant savings as rates fell. But mortgage rates are fickle things, as we’ve seen in recent weeks, and they’ll play a massive role in determining appreciation and affordability — especially for first-time buyers — going forward in 2024,” said Skylar Olsen, chief economist at Zillow. “Fortunately, rate lock appears to be wearing off for some homeowners, who show encouraging signs that they’re ready to come back to the market.”
