Are More Homeowners Selling as Mortgage Rates Come Down?

Are you looking to purchase a Kansas City home in the near future? There's good news! The recent downward trend in mortgage rates will not only help with affordability, but may also inspire more KC homeowners to put their houses up for sale.

The Mortgage Rate Lock-In Effect

One factor that's limited options for Kansas City buyers over the past year is how few homes were on the market. Many homeowners opted to delay their selling plans as mortgage rates increased. An article from Freddie Mac explains:

"The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked."

Many homeowners chose to stay put and maintain their current lower mortgage rather than move and risk a higher rate on their next home.

Early Signs Show Those Homeowners Are Ready To Move Again

The latest data from reveals more homeowners are putting their houses on the market in December 2023 compared to December 2022. This data point is known in the real estate industry as new listings (see graph below):


Why is this so significant? Usually, activity in the Kansas City housing market slows down in the later months of the year as some sellers delay their moves until January.

For the first time since 2020, we're seeing an uptick in new listings this time of year. This trend could signal that the rate lock-in effect is slightly easing in response to lower KC mortgage rates.

What Does This Mean for You?

While you shouldn't expect a sudden influx of options for your home search, the most recent data points to more Kansas City sellers deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS):

"A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . ."

In short, more homes might come onto the Kansas City market, giving you more alternatives to select from on your home-buying journey.

Bottom Line

As Kansas City mortgage rates come down, more sellers may re-enter the market – allowing you to find the home you're looking for. The local real estate experts on the Just Say Home Team can help you stay on top of the latest listings in the Kansas City area and learn more about what the current housing market trends mean for you!

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