April Market Report: Intent to Sell Continues to Rise

Nearly four months into the year, experts are predicting fewer benchmark rate cuts for 2024. Increasingly, discussion is turning instead to whether or not cuts are coming and even whether there could be another rate increase. But as we move through the spring selling season, more homeowners are interested in selling — sometimes because rates are staying higher for longer.

The share of homeowners intending to sell is trending up 

Twenty-two percent of homeowners currently have their home listed for sale or are considering selling their home within the next three years, according to data collected by Zillow in March. Respondents said a large motivator was the decreasing affordability of their current home. 

• 32% stated that they could no longer afford their home, compared to 17% in Q1 2023.
• 44% reported not wanting to be responsible for repairs and maintenance, compared to 37% last year.
• Almost six in 10 homeowners intending to sell are more optimistic about financial gains in a home sale this quarter than last.
• 49% think they’ll get more money now than in the future. 

“Homeowners have amassed very advantageous equity in the last five years,' says Orphe Divounguy, Zillow Senior Economist. “That and rising financial wealth and incomes leave them a little less impacted by mortgage rates staying high for longer. The increase in new listings earlier this year was concentrated in relatively affordable regions and markets where many homeowners simply don’t have a mortgage.”

That means more homeowners may be in a position to downsize or more to a more affordable area. “What’s more,' Divounguy says,' homeowners holding mortgages above 5% have shown more readiness to move, as the sustained higher rates don’t necessarily represent a higher pain point.”

The number of 'million-dollar cities' in the U.S. hits a new high

There are currently 550 U.S. cities where the typical home value is $1 million or more, up from 491 a year ago, according to new Zillow data. This also affects mortgage rate lock-in. Homeowners are less likely to sell in more expensive markets — because they’re less likely to have paid off mortgage debt and less likely to find more affordable options nearby. 

California boasts the most million-dollar cities, followed by New York and New Jersey. Florida, Texas, and Delaware are the only states that saw a drop in million-dollar cities over the past year.

“Many of these markets still suffer from under-building,” Divounguy says. “In Florida and Texas, new construction is up, and that significant increase in supply has helped to lower home values.”

Inflation has been on the rise since January

The April 10 CPI report showed that inflation rose slightly to 3.5% year over year in March, up from 3.2% in February. This was higher than most economists' predictions and not what the Federal Reserve wants. It’s also not what buyers — or some sellers — want if they’re still waiting for rates to drop. 

Until the CPI report shows consistent disinflation, anticipation of rate cuts is likely premature. Keep an eye on these monthly reports from the U.S. Bureau of Labor Statistics.