Stale home listings rise as overpricing impacts real estate market

More homes are remaining unsold on the market for extended periods, raising concerns about sellers' pricing strategies. In December 2024, half of all active listings were on the market for at least 70 days, a significant increase from the previous year and the longest median time since 2019.

The percentage of homes listed for over 180 days reached 24.3% last month, marking the highest December figure since 2020. Stale listings often signal potential issues to buyers, though experts attribute this primarily to incorrect pricing.

"Overpricing is the main culprit for listings becoming stale," stated Realtor.com senior economist Joel Berner. He noted that sellers are influenced by high valuations during the buying surge of 2021-22 and resist lowering prices despite current market conditions.

Home prices continue to rise nationally but at a slower pace compared to previous years when mortgage rates were significantly lower. This shift challenges sellers accustomed to rapid price increases. "Realizing that your home is worth less on the market than it was a few years ago is a tough pill to swallow," Berner added.

In December, increased time on the market was observed in 46 out of the 50 largest metro areas compared to last year, with Nashville, TN; Orlando, FL; and Rochester, NY experiencing notable rises. At the state level, homes in Arizona, California, Colorado, Florida, Hawaii, Idaho, Nevada, Oregon, Tennessee, Texas, Utah, and Washington also spent more time on the market than in pre-pandemic years.

Higher mortgage rates nearing 7% have impacted buyer purchasing power. "Behind the scenes is the true villain of the story: mortgage rates," Berner explained. He suggested that higher rates reduce demand and prolong listing times.

December's median list price dropped by 1.8% from a year earlier to $402,502 due partly to an increase in smaller home listings. The slowdown in sales further complicates accurate pricing due to fewer comparable recent sales data.

Brian Stephens from eXp Realty emphasized deeper analysis for accurate pricing amid slow sales: "You do have to dig deeper into data... stay in the same ZIP code."

Experts caution against interpreting rising stale listings as an impending crisis but rather as a return to pre-pandemic norms where selling took months. "We’re getting back to a normal market where it takes three to five months to sell a house," said Stephens.

For sellers with prolonged unsold properties, reducing prices may be necessary despite resistance from some homeowners. Stephens sometimes advises relisting after withdrawing from the market or changing agents if no sale occurs within a year.

"Sometimes it's best... just let somebody else try it," he concluded regarding long-unsold homes potentially benefiting from new representation and pricing strategies.