For those who believe in what it means when a famous groundhog doesn’t see his shadow, spring might be coming early—particularly for the housing market.

The biggest indicator that the largely frozen market is thawing is the massive spike of fresh listings that sellers added to the market, according to the latest data from Realtor.com®. New listings were up by a whopping 12.8% for the week ending Feb. 3 compared with the same time last year.

“It was the biggest jump in nearly three years,” says Realtor.com economist Jiayi Xu in her most recent analysis.

Overall housing inventory (of both new and old listings) shot up by 12.2% for the same period. All in all, this adds up to what Xu calls “more options for home shoppers.”

What does this inventory boon mean for the spring home shopping season? We’ll break down the latest data from the Realtor.com economists—and what the numbers mean for buyers and sellers—in this newest installment of “How’s the Housing Market This Week?”

Mortgage rates are ‘stagnant’

Buyers have long been keeping a close eye on mortgage rates—and now sellers are, too.

“Sellers are closely monitoring mortgage rates,” says Xu, “and adjusting their selling strategies accordingly.”

Last fall’s rate in the high 7% range, the highest in 23 years, had many homeowners “locked in” to their low existing rates. If they wanted to sell their homes to buy new ones, they would have to give up their low rates and take out loans with much higher ones. This led many to stay put.

Rates have fallen since then by about 1 percentage point. According to the latest Freddie Mac data, rates for a 30-year fixed-rate home loan averaged 6.64% for the week ending Feb. 8. (Last week’s rate averaged 6.63%.)

For the past two months, mortgage rates have been stuck in the mid-6% range, refusing to make any significant swings up or down.

“Mortgage rates remain stagnant,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

So then why have so many sellers decided to head to market? Perhaps it’s because they now surmise that mortgage rates are going nowhere fast, and they are finally making their moves before rates possibly tick up again.

The home price feedback loop

Like mortgage rates, median home prices have been trapped in a cycle for months now, rising and falling like small waves without making a big splash in either direction.

“Home prices have been in a rough holding pattern since May 2023 and have deviated from prior-year levels only by a range of -0.9% to +2.2%,” says Xu.

For the week ending Feb. 3, the median home list price was 0.9% higher compared with the same week last year. (The median home list price was $409,500 in January.)

However, buyers looking for good news will find that median home prices aren’t growing as quickly as usual.

“Although the nation’s median home listing price typically rises after the first week of the year, we may not see the intensity of price growth that we’ve seen in 2021 to 2023,” says Xu.

The number of homes for sale is up, but still low overall

While the boost in homes for sale is welcome news, the number of homes for sale is still 40% lower compared with the pre-COVID-19 years between 2017 and 2019.

Plus, Xu warns that the push and pull between supply and demand could nudge home prices higher. If there are only a few homes for sale, sellers can charge more and buyers will often bid prices up to secure a home.

“If improvements on the supply side do not align with the increasing demand from buyers, there exists the potential for prices to keep rising, thereby contributing to the persistence of elevated home prices,” Xu adds.

The housing market’s big picture

What housing market future all of these data points will add up to remains to be seen. For now, buyers are diving into the market and making offers, likely excited by the new listings.

The days a typical home spent on the market for the week ending Feb. 3 was three fewer than the same week a year ago. (Homes spent an average of 69 days on the market in January.)

They might be moving quickly because there are no guarantees that the wave of fresh listings will continue.

“Despite last week’s encouraging boost in listing activities, additional data points are required to confirm whether sellers are responding as promptly as anticipated and to assess the sustainability of this significant improvement,” says Xu.

The post The Housing Market Sees the ‘Biggest Jump’ in 3 Years appeared first on Real Estate News & Insights | realtor.com®.