The housing market is showing signs of improvement as more mortgage-locked sellers are putting their homes up for sale, according to JPMorgan Asset Management. This trend, known as the “mortgage lock-in” effect, has caused existing homeowners to hesitate in selling their properties in order to hold onto the lower rates at which they financed their homes in the past.
However, recent months have seen an uptick in home sales, indicating that this lock-in effect may be loosening its hold on potential sellers. Existing home sales saw a 9.5% increase in February, and inventory also rose by 5.9% from the previous month, according to data from the National Association of Realtors. Real estate economists suggest that homeowners are becoming more willing to enter the housing market, recognizing that high mortgage rates are likely here to stay for some time.
The new supply of homes currently under construction is also contributing to this increase in inventory, estimated at around 1.6 million by JPMorgan. US Census data shows that housing completions reached 1.7 million in February, marking a 15.6% increase from the previous year. This positive news for homebuyers who have faced challenges due to the supply-demand imbalance in recent years. The lack of inventory has led to higher home prices, with the median US home costing $412,227 in February, according to Redfin data.
While the housing market recovery is expected to be gradual, real estate economists and researchers caution that it could take years for supply to fully meet demand
