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Many homeowners want to upsize or downsize, but an estimated 20% stay in place to avoid replacing their current low mortgage rate with a higher one.<\/span><\/span><\/p>\n<\/div>\n SEATTLE \u2013 Six of every seven (85%) U.S. homeowners with a mortgage have an interest rate that\u2019s far lower than today\u2019s average level of 6%, according to a Redfin analysis of Federal Housing Finance Agency (FHFA) data. For the analysis, Redfin considered a \u201clow mortgage rate\u201d as anything under 5%.<\/span><\/span><\/p>\n These homeowners may long to upgrade their home or downsize \u2013 and may have been waiting years for the chance to do so \u2013 but they\u2019re making a financial decision to stay in place.<\/span><\/span><\/p>\n As a result, higher mortgage rates do more than discourage buyers \u2013 they also discourage sellers. <\/span><\/span><\/p>\n The high share of homeowners who feel locked into their low mortgage rate is contributing to a steep decline in listings, according to Redfin. New listings slumped 19% year-over-year during the four weeks ending Sept. 11, the largest drop since May 2020.<\/span><\/span><\/p>\n For example, Redfin found that in Atlanta, Chicago, Los Angeles and Washington, D.C., homeowners with a mortgage rate below 3.5% were 7.6% less likely to put their homes up for sale in August than homeowners with a rate above 3.5%.<\/span><\/span><\/p>\n Listings are also declining because some owners hesitate to list their home when the market is slowing and prices are starting to fall in some areas.<\/span><\/span><\/p>\n \u201cThe plunge in new listings is hindering growth in housing supply, which is keeping home prices relatively high even though the market is slowing down,\u201d says Redfin Deputy Chief Economist Taylor Marr. \u201cHousing supply fell 1% in August from the month before; normally, it would rise during a downturn.\u201d<\/span><\/span><\/p>\n Mortgage rates last week eclipsed 6% for the first time since November 2008 \u2013 during the Great Recession \u2013 as the Federal Reserve seeks to quell inflation. Rising rates have pushed the typical homebuyer\u2019s monthly mortgage payment up 42% from a year ago, fueling a broad slowdown in the housing market.<\/span><\/span><\/p>\n \u201cThe good news is that people who already own homes have locked in relatively low mortgage payments,\u201d Marr says. \u201cThe bad news is that homeownership is moving further out of reach for other folks as rising rates, elevated home prices and the persisting housing shortage make buying a house more expensive.\u201d<\/span><\/span><\/p>\n Even with higher mortgage rates, some current homeowners still decide to list their home. Thanks to rising home prices, many owners built up thousands of dollars in home equity during the pandemic. For them, moving and taking on a higher interest rate isn\u2019t a huge deal \u2013 especially if they\u2019re moving to a more affordable place.<\/span><\/span><\/p>\n However, the prospect of cashing out that home equity is starting to wane as price-growth slows and homebuyer demand dries up.<\/span><\/span><\/p>\n \u00a9 2022 Florida Realtors\u00ae<\/span><\/span><\/p>\n<\/div><\/div>\n <\/p>\n <\/p>\n\nIt\u2019s also a fear of falling prices<\/span><\/span><\/h3>\n
It\u2019s not all homeowners<\/span><\/span><\/h3>\n