Shaina Mishkin

The housing market is thawing this spring -- but not in the way many expected.

Hopes were high for a rebound this year. Housing economists expected that existing-home sales, which dragged along at nearly 30-year lows in 2023 and 2024, would get a modest boost once falling mortgage rates coaxed more sellers out of their ultralow 30-year rates.

So far, that hasn't happened: Mortgage rates remain stuck well above 6%. More owners are listing their properties, but buyers remain reluctant, sending existing-home sales last month to their slowest April pace since 2009, according to the National Association of Realtors.

As political and economic uncertainty shook markets last month, buyers backed away even as inventory rose, Barron's previously reported . New listings measured by Zillow rose 7.6% from the year prior while pending sales fell 2.5%. Those listings joined a pool of houses for sale that grew to its largest size since August 2020, according to the company's data.

It might seem counterintuitive that so many people would list their homes at a time when there's not much excitement in the market. More than two in five consumers told Fannie Mae that April was a bad time to sell a house, the largest share of respondents since late 2023. But many sellers are tired of postponing life changes after staying put for a period of time, notes BTIG home building analyst Carl Reichardt.

"If you're sitting on a 3% mortgage rate, that's neat -- but then the next year, you still have a 3% mortgage rate, but you're a year older and your needs may have changed," he says. "Time marches on, and people end up ultimately having to make changes."

A relatively high number of new homes on the market -- and the deals and incentives builders continue to offer to close sales -- could be helping to draw some move-up buyers, opening up previously-owned homes for sale. Home building during the pandemic ramped up significantly in major markets in Texas, Florida, and much of the southeast, says Rick Palacios Jr, the director of research at John Burns Real Estate Consulting.

Builders continued to cut prices and offer discounts this spring to draw in buyers. Palacios' April industry survey found that builders expect their prices to be down nationally 1% for the year net of incentives. "It's very abnormal for the industry to tell us they think prices are going to be down for the year -- but they did," he says.

Some homeowners, particularly those with vacation homes, second homes, or investment properties, might be selling because of the growing cost of holding those properties, notes Selma Hepp, the chief economist at property analytics company Cotality, formerly CoreLogic.

The median U.S. property tax rose 27.4% between 2019 and 2024, according to Cotality. And the average homeowners-insurance premiums rose 33% between 2020 and 2023, according to a National Bureau of Economic Research working paper written by Benjamin J. Keys & Philip Mulder. "I think that's really propelled some of the increase in inventories," says Hepp.

Institutional investors are selling more than they're buying, according to real estate analytics firm Parcl Labs -- especially in some parts of the country. "Florida markets, once institutional favorites, are seeing significant pullback, particularly in Tampa, which historically had a very heavy institutional presence," Parcl Labs co-founder Jason Lewris told Barron's. "Florida has become very risky -- it dominates the lists of year-over-year price decliners and markets with the most price cuts."

Still other sellers might be ramping up plans to move -- particularly if they think they could miss out if they wait. Some in Washington, D.C., where home listings climbed this spring, have accelerated their sales process, "worrying that, if things get worse, they'd rather sell now than a year from now," says Compass agent Hans Wydler.

Sellers may view this time of year as the most profitable time to list. A Zillow analysis of 2024 sales data found that premiums peaked in late May last year, with sellers reaping a roughly $5,600 premium. "Activity clusters around spring and summer because that's generally when there are most options and most buyers -- increasing the chances you can make a transaction," Zillow senior economist Kara Ng said.

The increase in available homes will make it easier for some to buy, but others will continue to be boxed out. Nationally, listings remain below 2019 levels -- a time when analysts and economists were already warning that more houses were needed to meet demand.

"More homes are coming on the market, and that's good," says Nadia Evangelou, the National Association of Realtors' director of real estate research. "But more homes alone won't fix the affordability crisis."

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 25, 2025 02:00 ET (06:00 GMT)

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