As the housing market slowed down, home delistings hit a record high of 2% on average each week during the 12 weeks ending Nov. 20, according to a new report by Redfin. The delisting rate averaged 1.6% one year ago.
However, the rate of delisted homes has dropped slightly since then, declining to 1.9% during the 12 weeks ending on Nov. 27.
According to Redfin’s report, sellers are opting to remove their homes from the market because they’re often receiving no offers that meet the price they want to sell for, and some cases, are receiving no offers at all. The sluggish buyer interest is due to high mortgage rates and persistently high home prices, according to the report.
“Some sellers are having a hard time grasping that we’re not in a housing-market frenzy anymore—it’s tough for them to swallow that they missed the boat on getting a high price,” Redfin real estate agent Heather Kruayai stated in the report. “By the time sellers realize their listing was priced too high, it has already been on the market for too long and is considered stale. I recently had two sellers take their homes off the market after 45-plus days.”
Many of the same markets that experienced the biggest booms during the pandemic are now facing the highest delistings, according to Redfin.
For example, 3.6% of active listings in Sacramento were delisted per week on average in the last three months — an increase of 1.6 percentage points from 2021. That is the largest increase of the metros Redfin analyzed. Austin also experienced a significant uptick in delistings (1.5%) as did Seattle (1.4%), Phoenix (1.3%) and Denver (1.2%).
During the pandemic, these housing markets had the highest increases in home prices after an uptick in remote work allowed employees to relocate. Today, these cities are cooling down faster than the rest of the nation.
The annual home-price growth in Sacramento was 29.3% in early 2021, but the metro saw a 0% growth in October 2022. Austin home prices grew to a record high of 43.5% year-over-year in spring 2021, but home-price growth had shrunk to 3.7% as of October 2022.
Per the report, West Coast markets experienced the most delistings. While Sacramento accounted for the highest share of delistings, San Francisco, Oakland, Seattle and San Jose, followed suit.
On the other hand, Pittsburgh had the lowest share of delistings at 1.3%, followed by Cincinnati (1.4%), New Brunswick (1.5%), Newark (1.6%) and Virginia Beach, VA (1.6%).
The buzz regarding the potential for a future recession is not helping in terms of hope for a better housing market next spring, said Seattle-based Redfin agent David Palmer.
“Usually, sellers who pull their listings off the market in the fall do it with the intention of listing again in the spring,” Palmer said. “Now people are talking about trying again in another year or two once the economy improves.”
On a positive note, some metros, primarily in the East, have seen decrease in the share of delistings compared to a year earlier, including Warren, Chicago, Newark, New Brunswick, Detroit and Montgomery County (Pennsylvania). These markets have been relatively resilient in the midst of the slowdown, according to the report.
Last week, Redfin reported homebuyers in the U.S. want to move to metros with a relatively affordable cost of living, especially in the Sun Belt. Sacramento, Las Vegas and Miami also ranked in the most popular destinations for relocation.
In October, a Redfin report found that high mortgage rates and high home prices were key factors behind people wanting to move from expensive coastal job locations like San Francisco, Los Angeles, New York, Washington, D.C., Boston, Chicago, Detroit, Denver, Seattle and Philadelphia to Sacramento, Miami, Las Vegas, San Diego, Tampa, Phoenix, Cape Coral, North Port-Sarasota, Dallas and Portland, Maine — which are more affordable in comparison.