Despite mortgage rates reaching nearly 4-year lows last month, the gap between sellers and buyers in the housing market grew to its largest size on record.
There were an estimated 630,000, or 46.3%, more home sellers than buyers in the United States in February, according to a new Redfin report. That is the largest gap in records dating back to 2013 and up from nearly 450,000, or 29.8%, a year prior.
Redfin defines a market with 10% more sellers than buyers as a buyer's market, which means it has been a buyer's market since May 2024.
"We're seeing a lot more inventory on the market compared to the past two years because the mortgage rate lock-in effect is easing and there's a lot of new construction," said Justin Gomez, a Redfin Premier real estate agent in Omaha, Nebraska, in a press release Monday. "This has been great for affordability, especially for the younger crowd. Our median home price is in the low $300,000 range. Two years ago, people were offering $15,000 over the asking price just to get a home, with multiple offers everywhere."
The lock-in effect, a result of mortgage rates sitting above 6% for the last three years, has been a major constraint on housing supply. The 30-year fixed-rate mortgage fell below 6% in February, but rates climbed back up to 6.22% last week, which could make sellers reconsider.
The number of homebuyers in the market decreased 2.4% from January to February to an estimated 1.36 million. The number of sellers also dropped 0.4% to an estimated 1.99 million, the report found.
Potential buyers left the market due to high home prices and mortgage rates, as well as mounting economic and political uncertainty, including the Iran war. The retreat in buyers caused some sellers, many of whom were also buyers, to do the same. Some sellers delisted after watching their homes sit on the market, while others choose not to list after seeing nearby homes sell for below the asking price, the report said.
New listings and relistings have started to rise, according to a different Redfin report, which could help increase inventory.
Where were the strongest buyer's markets?
Sellers severely outnumbered buyers in the South. Miami notably had an estimated 163% more sellers than buyers last month, followed by Nashville, Tennessee (120%), Austin, Texas (112%), West Palm Beach, Florida (110%), and San Antonio (104%), the report found.
The Sun Belt increased in popularity during the pandemic, triggering homebuilders to ramp up production, which was a reason for the abundance of sellers in the market. Buyers also left the market because housing costs have priced people out in recent years, the report said.
There were only five seller's markets in February, four of which resided in the Northeast. Newark, New Jersey, had an estimated 31.1% fewer sellers than buyers, while Montgomery County, Pennsylvania (-29%), Nassau County, New York (-25.8%), Milwaukee (-25.2%) and New Brunswick, New Jersey (-14.5%), also posted strong seller's markets, the report showed.
On average, home prices rose 2.2% across all five seller's markets on an annual basis last month, compared with a 0.3% incline in the 37 buyer's markets, the report found.
