The surprising reason home prices remain stubbornly high

A growing number of home sellers are taking lingering properties off the market instead of lowering their prices, keeping overall costs high and dampening available listings.

Nationwide, delistings rose 52% in September compared to the year before, after peaking at a nearly 72% annual growth rate in August, according to fresh data from Realtor.com. That’s up from September 2024, when delistings rose 46%.

Summer is usually the busiest time in the housing market, and people are more likely to take their homes off the market in the winter. But in September, the rise in delistings outpaced inventory growth threefold, above and beyond typical trends. The number of delistings compared to new listings also rose: for every 100 new listings in August, 28 homes were delisted, up from 16 in August 2024.

There are a few reasons. Scores of owners have low mortgage rates that they secured during the coronavirus pandemic, and they are hesitant to give those up. Other households may also have unrealistic expectations about what buyers are willing to pay, or they’re waiting to see how the economy fares.

The result is that sellers are pulling back when buyers and the broader market crave more affordable options, said Jake Krimmel, a senior economist at Realtor.com.

“Delisting is taking a home off the market without selling,” Krimmel said. “It’s emblematic of a failed transaction, and it is also a kind of metaphor for the market right now.”

Inventory isn’t vanishing entirely. Active listings still rose for the 24th straight month in September. But the pace has eased every month since May, signaling a kind of plateau when the country still doesn’t have enough homes to meet demand.

One result: Home prices are still high. One closely watched metric, released Tuesday by the S & P Cotality Case-Shiller U.S. National Home Price NSA Index, showed August prices rose 1.5% compared to the year before. That was down slightly from a 1.6% rise the previous month.

The rising share of delistings is also part of why what’s known as the “lock-in effect” is predicted to stick around longer than economists expected. Many homeowners have been “locked in” to very low mortgage rates — 2, 3 or 4% — since the pandemic and don’t want to give them up. About 70% of current owners have a rate of 5% or lower, according to KPMG. In mid-October, the average 30-year fixed rate mortgage was 6.19%, according to Freddie Mac.

Housing economists figure that “locked in” households will still move eventually; they might have more kids or relocate for a job. Krimmel said a new listing could be a sign of someone “trying to get unlocked.” But if the seller isn’t pressed to move and has a low mortgage rate or wants to hold out for a desired price, the rest of the market stays “in this residual holding pattern,” he said.

Sellers may also hesitate to lower prices if they watched friends or neighbors fetch sky-high sums over the past few years, when bidding wars and all-cash offers dominated the market, said Yelena Maleyev, senior economist at KPMG.

“That kind of psychology sticks around for a while,” Maleyev said. “‘My neighbor sold their house for $100,000 over asking three years ago. Why can’t I?’”

The trend ultimately sheds light on how people feel about the economy. With much uncertainty on prices, jobs and growth, people are waiting to see what 2026 brings. They’re also hoping for lower mortgage rates as the Federal Reserve plans to trim its benchmark rate into next year. On Wednesday, the Fed issued its latest quarter-point cut, and while central bankers don’t set mortgage rates themselves, those cuts typically make mortgages more affordable.

Meanwhile, major cities are seeing eye-popping delisting rates. Over the past few months in Miami, there were about 55 homes delisted for every 100 new listings coming online. For every 100 new homes listed in Houston, around 40 listings were pulled; in Tampa, around 33.

In Nashville, Ashley Luther saw a slight summer slowdown, combined with more people taking their homes off the market instead of trying a price cut. But that’s brought breathing room to the market in other ways, she said. Many owners have turned their houses into rentals, allowing them to keep their low mortgage rates — and the option of selling down the line. For renters, that’s cooled prices and boosted inventory in a city that saw housing costs soar during the pandemic.

“It’s an unintended consequence of listings coming off the market,” said Luther, owner and broker of CHORD Real Estate. “I can’t remember a time, in any price point or any area of Nashville, where I’ve seen a renters’ market.”

Still, economists say there’s a split between people who can yank their houses off the market and wait for the right offer — and those who can’t. Some households may be up against deadlines or under enough financial pressure that they don’t have a choice.

In central Phoenix, Michael Kemp and his wife listed their four-bed, three-bath house a few weeks ago, hoping to downsize to a smaller home that would cost less than their $5,300 per month mortgage. They put the home on the market for $1.1 million.

So far, no bites.

After lowering the price — first to $1.05 million, then to $999,999 — Kemp isn’t sure what to do. Part of the decision is personal: Since the pandemic, he and his wife have had several job changes, and if work was steadier, they might stay put.

But Kemp also thinks the entire economy is in transition. As a Trump supporter, Kemp said he believes in the president’s push to recalibrate the economy. But it will be bumpy, and “we’re experiencing that crunch,” he said. In the meantime, he said his options — to sell, refinance or explore other loan products — are few and far between.

“The flexibility is not there,” Kemp said. “So here we are just dog paddling, so to speak.”