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The spring usually turns up the heat in the housing market, but this season, the sizzle is fizzling out.
Despite a flood of new listings, buyers are cooling off from high prices, rising mortgage rates and economic uncertainty, according to new reports from Zillow and Redfin.
Pending homes sales declined 3.4 percent year over year during the four weeks ending May 11, marking the lowest level for this time of the year since 2020. New listings hit the market, but buyers are not coming off of the sidelines.
“People are starting their home search, then backing out because they either talked to their lender and realized how high their monthly payments would be, or they’re feeling jittery about tariffs, a potential recession and/or the possibility of getting laid off,” Meme Loggins, a Portland, Oregon-based Redfin Premier agent, said in the report.
Zilow Senior Economist Kara Ng, on the other hand, noted that while anxiety was high at the beginning of the season, it is improving.
“As uncertainty has since eased, improved availability and affordability in homes could lead to a rebound in the coming months,” she said.
Inventory is indeed improving. New listings were up 9.8 percent in April from the previous month and up 5.1 percent as of May 11. Total homes for sale climbed 14.3 percent, and the median time on the market stretched to 16 days, three days longer than last year. This slowdown is giving buyers more time to negotiate and make deliberate decisions.
Nearly 25 percent of Zillow listings saw a price cut in April, which is a potential opening for first-time buyers. However, high mortgage rates remain a barrier.
Chen Zhao | Redfin’s Head of Economics Research
Redfin’s Head of Economics Research Chen Zhao stated that tariff cuts on China have ultimately pushed mortgage rates up.
“It’s a catch-22 for homebuyers,” Zhao explained. “Mortgage rates are unlikely to fall unless all of the new tariffs are eliminated, or if the country falls into a fairly severe recession, which would cut housing budgets for many Americans.”
Still, some buyers are adapting. Loggins said smaller homes and condos are becoming popular because of their affordability. Sellers are also offering mortgage-rate buydowns to attract interest as well as buyer concessions, including money for repairs or closing costs.
