Home sellers are increasingly giving up rather than lowering their prices.
Nationwide delistings jumped 52% in September compared to the year before, according to Realtor.com. That's after peaking at nearly 72% growth in August. For every 100 new listings in August, 28 homes were delisted - up from just 16 in August 2024.
"Delisting is taking a home off the market without selling," said Jake Krimmel, senior economist at Realtor.com. "It's emblematic of a failed transaction, and it is also a kind of metaphor for the market right now."
Several factors are driving this trend.
Many homeowners locked in ultra-low mortgage rates during the pandemic - 2%, 3%, or 4%. About 70% of current owners have rates of 5% or lower, according to KPMG. With current 30-year fixed rates around 6.17%, they're reluctant to sell and take on a higher rate.
Some sellers also have unrealistic price expectations. They watched neighbors sell for huge sums during the bidding war frenzy of 2021-2022 and think they deserve the same.
"That kind of psychology sticks around for a while," said Yelena Maleyev, senior economist at KPMG. "'My neighbor sold their house for $100,000 over asking three years ago. Why can't I?'"
Others are waiting to see how the economy performs or hoping mortgage rates drop further as the Fed continues cutting its benchmark rate.
The "lock-in effect" is lasting longer than economists predicted.
Housing experts figured locked-in homeowners would eventually need to move for life reasons - growing families, job relocations, downsizing. But if a seller isn't pressed to move and has a low mortgage rate, they'd rather pull their listing than accept a lower price.
Krimmel said a new listing could signal someone "trying to get unlocked." But when those sellers don't get their desired price and delist instead, the market stays "in this residual holding pattern."
This trend keeps inventory tight and prices elevated.
Active listings did rise for the 24th straight month in September. But the pace has slowed every month since May, creating a plateau when the country desperately needs more homes.
Home prices remain stubbornly high as a result. The S&P Case-Shiller National Home Price Index showed August prices rose 1.5% year-over-year. That's barely changed from July's 1.6% increase.
The rising delistings mean buyers looking for affordable options have fewer choices. Properties that do sell command strong prices because competition for available homes remains fierce.
The delisting trend reflects broader economic uncertainty.
With questions about inflation, jobs, and growth, people are waiting to see what 2026 brings before making major moves. Many are also hoping for lower mortgage rates as the Fed continues cutting rates, which could make buying their next home more affordable.
The Fed issued another quarter-point cut Wednesday. While central banks don't directly set mortgage rates, those cuts typically help make mortgages more affordable over time.
Stubborn sellers are keeping home prices high by refusing to adjust to market reality.
Rather than dropping prices to attract buyers, they're pulling listings and waiting for conditions to improve. That strategy might make sense for individual sellers, but it's terrible for the overall housing market.
Buyers desperately need more inventory and lower prices. Instead, they're getting less inventory and stubbornly high prices because sellers won't accept that the 2021-2022 frenzy is over.
The lock-in effect was supposed to fade by now. But with 70% of homeowners enjoying mortgage rates below 5%, and current rates above 6%, many would rather stay put than move.
This creates a vicious cycle. Limited inventory keeps prices high. High prices and elevated mortgage rates discourage buying. Discouraged buyers mean sellers don't get their asking prices. Frustrated sellers delist rather than cut prices. And round it goes.
Something needs to break this pattern. Either mortgage rates need to drop significantly, giving locked-in homeowners confidence they can buy their next home affordably. Or home prices need to fall enough that sellers accept the new reality.
Right now, neither is happening. Sellers are choosing to wait it out, hoping 2026 brings better conditions. That might work for them individually, but it keeps the housing market frozen for everyone else.
