Why US homes were pulled off market at record pace last month

US listings of home for sale got pulled a record clip in November because of a major freeze in the market that surprised sellers, according to a recent report by real estate firm Redfin.

An average of 2% of US homes up for sale were delisted each week during the 12-week period ending on Nov. 20, the report said. The share of homes pulled from the market was the highest on record and up from 1.6% during the same period one year ago.

The spike in delisted homes for sale is attributable to a recent collapse in buyer demand, according to Redfin. Homeowners listed their properties expecting the huge offers of the pandemic-era housing boom – they are instead struggling to find any buyers at all.

“Some sellers are having a hard time grasping that we’re not in a housing-market frenzy anymore — it’s tough for them to swallow that they missed the boat on getting a high price,” said Heather Kruayai, a Florida-based Redfin real estate agent.

“By the time sellers realize their listing was priced too high, it has already been on the market for too long and is considered stale,” Kruayai added.

Buyer demand has plummeted due to the sharp rise in mortgage rates, which have more than doubled this year as the Federal Reserve increases interest rates. The average monthly payment on a long-term mortgage is 40% more expensive than it was at this time last year, according to the firm.

 “Usually, sellers who pull their listings off the market in the fall do it with the intention of listing again in the spring,” said David Palmer, a Seattle-based Redfin agent. “But with the word `recession’ out there, there’s not as much optimism about spring being a better market. Now people are talking about trying again in another year or two once the economy improves.”

The sharpest spikes in delisted homes have occurred in so-called “pandemic boomtowns” that had experienced a record surge in home prices in recent years.

For example, a 3.6% share of home listings per week were pulled down in Sacramento, CA, during the 12-week period – the most of any metro area tracked in the report.

Redfin based its calculations on the 43 most populous US real estate markets for which it had sufficient data.

Delistings are just one sign of the fallout from what Fed Chair Jerome Powell has described as the current US housing bubble. Home prices are falling fast in many markets as sellers attempt to stoke interest despite the rough economic outlook.

Last week, research firm DataTrek warned that home prices could fall by 20% over the next few years as the housing correction plays out across the country.