Why the Number of Homes for Sale Matters
The original article identified a shortage of homes for sale as the housing market’s biggest challenge. Its central point remains useful for understanding limited inventory: homeowners may hesitate to sell even when they would otherwise like to move.
Mark Fleming, Chief Economist at First American, identified two forces behind the historically low existing-home inventory described in that article: rate-locked homeowners and the fear of not finding another home to buy.
Those concerns are closely connected. One is about the cost of the next mortgage. The other is about whether the next home will be available at all.
For buyers and sellers, the practical question is not simply whether inventory is low. It is how to evaluate the choices available without letting either concern make the decision for you.
Issue One: Homeowners Who Feel Rate Locked
A homeowner may want to move but hesitate to give up an existing mortgage with a lower interest rate. If the replacement mortgage carries a higher rate, the higher borrowing cost can make staying put more appealing.
That situation is often called being rate locked. It does not mean the homeowner cannot sell. It describes the financial reason they may be reluctant to do so.
The Rate Comparison Behind the Concern
The original article cited Federal Housing Finance Agency data showing that the average interest rate for existing homeowners with mortgages was below 4%. It contrasted that figure with typical mortgage rates offered to buyers above 6% in the period it discussed.
Those figures describe the source article’s market snapshot, not a current rate quote. The important takeaway is the gap between an existing mortgage rate and the rate available for a replacement loan.
The article explained that many homeowners were choosing to stay rather than move into a home with a higher borrowing cost. When many owners make that choice, fewer existing homes become available in a market that needs more inventory.
What Could Encourage More Owners to Move?
The original article also reported that experts expected mortgage rates to decline gradually during its forecast period. It suggested that lower rates could make more homeowners willing to move.
That was a forecast, not a guarantee. The evergreen point is conditional: if mortgage rates decline, some owners may become less reluctant to give up their existing financing.
If you are weighing a move, start by comparing your existing mortgage with a potential replacement loan. Ask for a clear explanation of the borrowing costs rather than deciding from the rate alone.
Issue Two: Sellers Worry About Finding Their Next Home
The second issue is straightforward: homeowners may be willing to sell, but they do not know where they would go.
The original article described potential sellers staying on the sidelines while waiting for more homes to become available. Their concern was not necessarily selling their house. It was finding something to buy afterward.
This creates a difficult connection between buying and selling. Owners who wait for more choices also keep their own homes off the market, contributing to the same shortage that concerns them.
Explore Your Options Before Ruling Out a Move
If this is what is holding you back, review the available options with a local real estate professional. Start with what you would need in your next home and which choices you are willing to consider.
Questions to bring to that conversation include:
- What would my next home need to offer?
- Which available homes would I realistically consider?
- Am I open to a newly built home?
- What would I need to understand before deciding to list?
The goal is not to pressure yourself into selling. It is to replace a broad worry about finding a home with a specific review of your options.
Include Newly Built Homes in the Discussion
The original article specifically recommended considering newly built homes. It noted that builders were offering concessions, including mortgage rate buydowns, during the period it covered.
Do not treat that observation as a promise that every builder or property will offer the same terms. Instead, ask whether concessions are available on a home you are considering and request an explanation of any proposed rate buydown.
New construction belongs on the list of options to explore, rather than being overlooked before you have reviewed it.
What These Issues Mean for Sellers
The original article attributed supply below pre-pandemic levels to these two issues. It also described that limited-inventory environment as a potential sweet spot for homeowners who wanted to sell.
That possible advantage should be considered alongside the concerns about buying again. The article’s recommendation was to work with a local real estate professional to explore the available choices, including the possibility of using existing home equity.
In plain English, look at both sides of the move. Review the opportunity to sell your home and the practical details of purchasing the next one.
Review the Equity in Your Existing Home
Home equity was another important part of the original article’s argument. It cited an ATTOM fourth-quarter report in which 48% of mortgaged residential properties in the United States were considered equity-rich.
ATTOM defined equity-rich properties as those where the combined estimated loan balances secured by the property were no more than 50% of its estimated market value.
This is a historical reporting snapshot, not a statement about your home or a current nationwide percentage. The original article used it to highlight how equity could make a meaningful difference when moving.
It recommended working with a local real estate expert to understand how putting equity toward the next purchase could help keep the cost of that home down.
Before assuming what you have available, ask for a review of your own situation. Then discuss how that equity might fit into your next purchase.
Make a Plan Before Making a Decision
Rate-locked homeowners and owners worried about finding their next home can both hold back housing inventory. The original article concluded that declining rates and homeowners exploring more options could bring more homes to market.
For your own move, focus on what you can review: your existing mortgage, replacement-home options, potential builder concessions, and available equity.
Your next step: write down what is holding you back, then gather your mortgage information and a list of what you need in your next home. Reach out to Ed Parcaut to discuss the financing side of that plan, and work with a local real estate professional to explore your buying and selling options.
