The Housing Market Is Picking up in Some of the Most Expensive Regions of the U.S.
The housing market is beginning to recover, with increased listing activity and homes going under contract, particularly in high-priced areas like Seattle and Los Angeles. However, the rebound is limited by homeowners with low mortgage rates who are reluctant to sell, contributing to ongoing supply constraints.
According to Yahoo Finance, listing activity and homes going under contract ticked up last month nationwide, the latest sign that some of the paralysis brought on by the rapid jump in mortgage rates in recent years is easing.
But there’s a limit to how far the housing market can rebound as homeowners with ultra-low mortgage rates stay put instead of listing their homes and accepting today’s rates of 6% or more, a phenomenon known as the rate lock-in effect.
“Generally, new listings and sales moved closer to pre-pandemic norms in September,” said Kara Ng, a housing economist at Zillow. “That’s still a long way to go in terms of normalizing supply.”
In September, the biggest gains came in pricy locales like Seattle, Los Angeles, and San Jose, Calif.
Those regions have higher proportions of buyers who finance their purchases and jumbo mortgages that hand homebuyers bigger monthly cost savings when mortgage rates fall. In some markets, listing prices have even dropped slightly.
About 950,000 homes were on the market nationwide in September. That number has been steadily rising this year, though it’s still about 22% below 2019 levels.
New listings rose by 25% or more last month compared to a year earlier in the Seattle, Silicon Valley, Denver, and Washington, D.C., areas, according to Realtor.com. Median listing prices in all of those markets top $599,000.
In expensive parts of the country, any mortgage rate savings can help spark buyer interest, said Tim Nguyen, a real estate agent in Santa Clara, Calif., where the median home lists for more than $1.4 million. Average interest rates this year dropped more than a percentage point from as high as 7.22% in May to closer to 6% last month.
“That always drives the market,” Nguyen said. “If you look at a $1 million home, for every percentage point drop it’s a little over $500 of savings every month. That’s significant when you need money to buy groceries.”
