Even as climbing mortgage rates raised financing costs for borrowers, the share of active listings that became newly pending hit their highest levels observed in March over the past five years, according to newly released data from Zillow.
The 4.6% yearly and nearly 30% monthly increase in newly pending listings was the second-largest monthly total since August 2022, the listings platform reported on Monday.
“Pent-up demand from three years of low sales volume and winter storms in January and February, along with the tailwind from lower mortgage rates earlier in the year, seem to have buoyed the market as home shopping season kicked off,” noted Mischa Fisher, chief economist at Zillow, in a statement accompanying a monthly market report.
Easing mortgage affordability over recent months took a hit in March, as typical mortgage payments rose 1.5% over the month, excluding taxes and insurance, to land at $1,789, down 4.4% from a year ago.
A global energy and trade shock stemming from the Iran war has pushed average mortgage rates on typical 30-year mortgages from the high-5% range before the conflict began on Feb. 28 to around 6.5% as of the last week of the month, according to Freddie Mac.
Despite the recent uptick, average mortgage rates remained roughly 0.3% lower than year-ago levels, according to ICE Mortgage Technology, which published a monthly mortgage performance report with March figures on Monday.
Assuming a 20% downpayment and a contract mortgage rate of 6.35%, the monthly principal and interest payment required to purchase the average-priced home in March was $2,169, says ICE, up 4% from February but down nearly 3% from a year ago.
While the homebuying enthusiasm may appear to fly in the face of declining consumer sentiment amid spiking energy prices linked to the fallout of the Iran war, Zillow’s Fisher said March housing data “signals that the market has turned a corner.”
An additional signal of resilient housing demand in March was a sharp reduction in listings’ time on market. Homes took a median of 19 days to go from active to pending last month, still two days longer than last year but nine days faster than February.
Active inventory was 4.2% higher in March than a year earlier and 9.5% higher than February, says Zillow. But a pronounced slowdown in new for-sale listings has put a lid on homebuyers’ options in the market, rising just 0.1% year over year in March.
As of February, according to Redfin, “stale” housing inventory comprised about half of all listings nationwide, meaning those properties had been lingering on the market for 60 days or longer. Realtor.com, a listings platform and competitor to Zillow alongside Redfin, noted that delistings as a share of new listings hit 32% in January, representing about 7% of all active listings.
With sellers heavily outnumbering buyers in many markets around the U.S., Zillow reported more sellers cut asking prices in March. The portion of listings with a price reduction last month was 22.6%, down 0.8% from a year ago but 2.4% above February levels.