Make no mistake, today’s housing market has plenty of homes for sale, but very few buyers are biting.

According to a new report by Realtor.com®, the overall number of homes for sale in the U.S. increased by a whopping 67.8% in February. That amounts to 234,000 more homes on the market than there were during this same month last year.

The problem, though, is that most of these listings are stale—ugly ducklings that have been sitting online for weeks or even months with no takers. Homebuyers and sellers all know that a real estate listing garners the most excitement in the first few days after it hits the market, so when a home lingers (and lingers), buyers get suspicious, wondering: What’s wrong with this house?

As for fresh listings, those were down in February, with 15.9% fewer home sellers entering the market compared with a year earlier. This lack of new homes for sale is even starker when you compare these numbers with pre-COVID-19 levels from 2017 to 2019, when fresh listings were 27% higher than they are now.

The growing problem of stale listings—at higher prices

Adding insult to injury is that, on average, most of this growing morass of picked-over, passed-up listings now cost more than they have in the past.

In February, listings hit a median asking price of $415,000—down from June’s all-time record high of $449,000, but nonetheless creeping up from January’s $406,000. Plus, this number is likely to tick up as we approach spring’s homebuying rush.

Piling onto a buyer’s financial hardships are mortgage rates, which have been rising since the past year and averaged 6.5% for a 30-year fixed-rate loan for the week ending Feb. 23, according to Freddie Mac. This means buyers typically fork over about $630 more per month for a house than they did just one year earlier.

This unsettling combo of steep mortgage rates, high home prices, and stale listings has more or less caused winter’s real estate market to grind to a halt. In fact, in February, homes spent a median of 67 days on the market—23 days longer than this same month last year.

The seller-as-buyer dilemma

What this market needs to get moving again is a fresh injection of new listings.

“Even though inventories are less constrained now than they were last year, I think buyers and the total sales figures will both benefit from an increase in sellers,” says Danielle Hale, chief economist of Realtor.com.

So what’s stopping sellers from listing right now? Many don’t want to give up their locked-in low mortgage rates—that ranged between 2% and 3% in 2021—and become buyers who’d now have to get a new mortgage at nearly double that rate.

“Lower mortgage rates would benefit buyers and especially seller-buyers who are trying to both buy and sell a home at the same time,” observes Hale.

Unless rates subside, she says, “I expect sellers in many markets will have good reason to stay put and hold onto mortgage rates that are still much lower than is available to today’s shoppers.”

Johnny Chappell, owner and broker of Chappell Real Estate in Raleigh, NC, agrees.

“It seems like we’ll be working with more buyers and sellers who need to move and fewer who simply want to move,” adds Chappell.

Lessons from Raleigh, NC

Although many buyers and sellers are reluctant to come to the closing table right now, this is not true across the board.

“Depending on the market, a buyer could be seeing a different trend,” says Hale. “A handful of markets offer shoppers lower prices this year compared to last year, so housing market conditions depend on where you are.”

One outlier that should give everyone hope is Raleigh, NC, where the total number of homes for sale ballooned by an astronomical 329.8% compared with last year. Plus, this is one of just a few metros where fresh listings are up—by 14.8% in February compared with this same month last year. (Metros include the central city, surrounding towns, suburbs, and smaller urban areas.)

“In Raleigh, we are finding that some of our buyers can secure homes for under asking price because sellers are now willing to negotiate as homes have been sitting for longer,” says Ryan Fitzgerald of Raleigh Realty Homes. “We are seeing the real estate market return to a sense of normalcy that we have not seen in a few years.”

Chappell agrees, adding, “We’ve almost tripled that amount of listings to start 2023.”

Is Raleigh a harbinger of what America’s spring market might look like? One can hope, although this will depend a bit on what mortgage rates do next.

“Unfortunately, after improving from fall to early February, mortgage rates have recently begun to trend up again,” says Hale.

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