A combination of weak buyer demand, low home prices and overall economic uncertainty is causing home sellers to change their minds and exit the market.
Nearly 85,000 U.S. sellers took their homes off the market in September, according to Redfin, an increase of 28% from September 2024 and the highest level for the month in eight years.
With so many listed stocks becoming obsolete and sitting on the market for longer and longer periods of time, sellers are delisting them. Redfin reported that 70% of listed properties in September had been on the market for more than 60 days.
Homeowners are seeing prices drop significantly and would rather wait than accept a lower offer. According to the S&P Kotality Case-Shiller U.S. National Home Prices NSA Index, prices rose 1.3% in September from a year earlier, slowing from August’s 1.4% rise.
“Inventories are tighter than they appear on paper due to the frequency of delistings,” said Asad Khan, senior economist at Redfin. “When tens of thousands of homeowners pull their homes off the market instead of accepting lower offers, it effectively reduces the supply of homes available to buyers, so sales prices remain elevated.”
Some sellers may even lower their prices multiple times. Zillow says a typical price reduction is about $10,000, but multiple price reductions are becoming more common as homes take longer to sell. Regular listings received a total of $25,000 in price reductions in October, matching the largest discount ever recorded by Zillow.
The housing market is currently at its lowest ebb. One in five delisted homes will be relisted, but that may not happen for several months as sellers are likely to wait for the busier spring season to relist.
Home prices are still 50% higher than just five years ago, but some sellers who bought in the past few years are facing potential losses. About 15% of homes delisted in September were at risk of being sold at a loss, the highest percentage in five years, according to Redfin.
According to Realtor.com, the supply of homes for sale is currently up about 15% compared to a year ago, but that could decline in the coming weeks due to seasonal factors and weakening consumer sentiment among both buyers and sellers.
Pending sales (based on signed contracts) rose 1.9% in October from the previous month, about the same month last year, real estate agents said. The monthly increase may be due to mortgage rates falling slightly and rising again in November.
