Home prices are back on the rise as the spring market proves more competitive than expected

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A sharp drop in new listings, adding to an already meager supply of homes for sale, is leading to renewed bidding wars.

New listings are 30% lower than pre-pandemic norms for this time of year.A "For Sale" sign outside of a home in Atlanta, Georgia, Feb. 17, 2023.After cooling for the better part of last year, home prices are on the rise again.

Roughly 30% fewer new listings came on the market in March compared with pre-pandemic norms. The deficit continues to grow, as fewer potential sellers want to list their homes in today's higher-mortgage-rate environment. This comes in the heart of the spring housing market, when demand is historically highest.

The national gains, however, do not show sharp differentials in price strength and weakness regionally. Prices in the West, where metropolitan markets had been most expensive, are well off their recent peaks, while 40% of other major markets have seen prices return to peak levels. Buyers are clearly getting used to the higher-rate environment, as sales have strengthened for the past few months. Homebuilders have recently reported strong quarterly earnings, as they use incentives like mortgage rate buydowns to pull in sales. Builders also have far more supply and are clearly benefitting from the lack of existing homes for sale.

 

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