More home sellers are taking listings off the market, Redfin says

The US housing market is experiencing a significant shift, with a growing number of sellers opting to delist their properties rather than accept low offers. According to recent data from Redfin, approximately 85,000 sellers took their homes off the market in September, marking a 28% increase from the same period last year and the highest level for that month in eight years.

Delistings on the Rise

This trend is largely attributed to weak buyer demand, weakening home prices, and overall economic uncertainty. As a result, many listings are stagnating, with 70% of properties in September remaining on the market for 60 days or longer. Homeowners are hesitant to sell at lower prices, choosing instead to wait for more favorable market conditions. In fact, home prices in September were only 1.3% higher year over year, down from a 1.4% rise in August, as reported by the S&P CoreLogic Case-Shiller US National Home Price NSA Index.

The frequency of delistings is having a profound impact on the market, effectively reducing the supply of available homes and keeping sale prices elevated. As Asad Khan, a senior economist at Redfin, notes, “When tens of thousands of homeowners pull their homes off the market rather than accept a low offer, it effectively reduces the supply of homes that are actually available for buyers.” This phenomenon is contributing to a tighter inventory than initially meets the eye.

Price Cuts and Relistings

In an effort to attract buyers, some sellers are resorting to price cuts, with the typical reduction being around $10,000. However, multiple reductions are becoming increasingly common, particularly for homes that take longer to sell. According to Zillow, the typical listing saw $25,000 in cumulative price cuts in October, matching the largest discounts ever recorded. Meanwhile, about 1 in 5 delisted homes are relisted, although this often occurs several months later, typically during the busier spring season.

The housing market is now entering its slowest season, which is expected to exacerbate the existing trends. Despite home prices being 50% higher than they were five years ago, some sellers who purchased their properties in recent years are facing potential losses. Redfin reports that roughly 15% of delisted homes in September were at risk of selling at a loss, the highest share in five years.

Market Outlook

The current supply of homes for sale is about 15% higher than it was a year ago, according to Realtor.com. However, this surplus is likely to shrink in the coming weeks due to the seasonal slowdown and weakening consumer sentiment among both buyers and sellers. Pending sales in October, which are based on signed contracts, saw a modest 1.9% month-to-month increase but remained relatively flat compared to the same period last year. This minor bump may be attributed to a temporary drop in mortgage rates, which have since risen again in November.