Homeowners Pull Listings at Record Pace, Squeezing Real Estate Sector
A 'seller's strike' driven by high mortgage rates is choking transaction volumes, posing a significant headwind for brokerages and lenders like Zillow and Rocket Companies.
A peculiar stalemate is gripping the U.S. housing market, creating a formidable challenge for the real estate services industry. Homeowners, reluctant to sell into a cooling market and sacrifice their low-rate mortgages, are pulling their listings at the highest pace in nearly a decade, effectively freezing transaction volumes and pressuring the business models of companies dependent on market turnover.
In September, the number of homes delisted by sellers saw a staggering 28% year-over-year jump, with nearly 85,000 properties being pulled from the market, according to a recent report from real estate brokerage Redfin. This trend, dubbed a 'seller's strike,' stems from a widening gap between buyer and seller expectations, fueled by mortgage rates that have hovered at punishing levels for much of the year.
This withdrawal of inventory is compounding an already difficult environment for real estate service providers. Companies like Zillow Group (NASDAQ: Z), whose revenue is heavily tied to real estate agent advertising, and Rocket Companies (NYSE: RKT), the nation's largest mortgage lender, rely on a steady flow of home sales. When transactions dwindle, so do their primary revenue streams from commissions, closing services, and new loan originations.
The core of the issue is the 'golden handcuffs' effect. A vast majority of current homeowners are locked into mortgage rates well below 4%, making the prospect of selling and buying a new home with a loan at over 6% financially unpalatable. This has kept existing-home sales hovering near multi-decade lows, creating a market defined by low supply and suppressed demand.
"Sellers are losing hope," the Redfin report noted, explaining that many homeowners are choosing to wait for a more favorable market rather than reduce their asking price. This dynamic creates a phantom inventory—homes that could be for sale but are being held back, leading to a shallow market for a limited pool of qualified buyers.
While the market shows some signs of life, with the National Association of Realtors reporting a modest 1.9% month-over-month increase in pending home sales in October, the broader trend remains sluggish. For companies built on transaction frequency, this low-volume environment presents a significant operational headwind.
Zillow, with a market capitalization of approximately $17.9 billion, and Rocket Companies, have both seen their business models tested. While their stock prices may show daily volatility, the underlying fundamentals of the housing market point to a protracted period of reduced activity.
The forward outlook for the sector is now intrinsically linked to the Federal Reserve's monetary policy and the trajectory of mortgage rates. Until affordability meaningfully improves, breaking the current market paralysis, the real estate services industry faces a challenging climate where its primary commodity—housing transactions—remains in critically short supply.