Strained housing affordability translated into a big listing deficit in 2023

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While transactions are still occurring every single day in the U.S. housing market—housing never stops—U.S. existing home sales have been suppressed all year. It was a slow year.

One reason for this is that spiked mortgage rates—rising from a 3% range in 2021 to briefly exceeding 8% this fall—have created a “lock-in effect” that has reduced churn in the market. There are far fewer new listings coming online, as many would-be sellers opt to remain on the sidelines and maintain their lower mortgage rate and lower monthly mortgage payment.

To show just how big of an impact the “lock-in effect” had on the 2023 housing market, ResiClub created a “listing deficit” calculation.

Here’s how it works: We compared every month since January 2020 to the same month in 2019.

If a given month had fewer new listings than in the same month in 2019, it had a “deficit.” If a given month had more new listings than in the same month in 2019, it had a “surplus”

For instance, in November 2023 there were 316,990 new listings as compared to 368,876 new listings in November 2019. That means November 2023 had a “deficit” of -51,886 new listings.

Click here to view an interactive version of the chart below.

Our analysis shows that every single month since January 2022 has had a new listing “deficit.” That also happens to be when mortgage rates started to soar as financial markets priced in the Fed’s rate hiking cycle.

Will this let up soon?

In November 2023, there was a new listing "deficit" of -51,886 homes, slightly down from the -73,968 "deficit" in November 2022. This suggests that the peak "lock-in effect" might be behind us.

The hope among many real estate agents is that a combination of sellers and buyers accepting that 3% and 4% mortgage rates will not return anytime soon, coupled with mortgage rates falling back under 7.00%, might be enough to bring more listings into the market in 2024.

This weekend, ResiClub PRO members will get a deeper regional look at this same topic in an article titled “The lock-in effect, as told by 2 maps.” We’ll show you the parts of the country where the “lock-in effect” is easing up.

NOTE: This article examines new listings, representing the number of homes that entered the market in a given month. This differs from active listings (referred to as inventory), which indicate what is currently on the market in a given month, including unsold old listings. Whenever ResiClub discusses the "lock-in effect," we are referring to the impact of the mortgage rate shock on new listings, not active listings.