The housing market is experiencing a decrease in competition.

• As more homeowners put their homes up for sale, properties are taking longer to sell due to high prices and interest rates.
• Here's what that means for homebuyers and sellers.

As more homeowners put their homes up for sale, properties are taking longer to sell due to high prices and interest rates.

The latest Zillow market report shows that new listings from home sellers increased by 13% in May compared to the previous year.

Zillow's senior economist, Orphe Divounguy, stated that there is an increase in sellers re-entering the market.

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With a decrease in buyers returning to the market, many new listings are simply increasing inventory, according to Zillow's findings. The number of homes on the market increased by 22% compared to the previous year.

Divounguy stated that homes are remaining on the market for a longer duration due to the slow sales pace, which is not matching the rate of homes being listed.

'The market is slowing down'

In May, approximately 61.9% of homes listed on the market had been for sale for at least 30 days without being sold, while about 40.1% of homes that were for sale in May had been listed for at least two months without being sold, according to a new analysis by Redfin.

Redfin's chief economist, Daryl Fairweather, stated that the market is slowing down as homes take longer to sell, resulting in an accumulation of inventory on the market.

Although there has been a recent increase in supply, "we're still facing a shortage of inventory in the for-sale market," said Divounguy. Despite a 34% decrease in housing inventory in the U.S. compared to pre-pandemic levels, according to Zillow.

"We have a shortage of approximately 4.3 million homes nationwide," he stated. "We are still facing a housing unit deficit."

Homebuyers are waiting on lower mortgage rates

Divounguy explained that due to high mortgage rates and strained household finances, buyers have been unable to enter the market.

Homebuyers may lack motivation and financial ability to purchase a home due to the incredibly high mortgage rates, which are relatively higher than during the pandemic, according to Fairweather.

The fixed rate mortgage in the U.S. decreased to 6.95% on June 13 from 6.99% a week earlier, as per Freddie Mac data from the Federal Reserve.

According to Fairweather, while mortgage rates may "change rapidly" or "in a flash," it is unlikely that there will be significant movement in the near future. The Fed has kept rates constant at its June meeting and now predicts only one rate reduction this year. The next meeting is scheduled for July 30-31.

"Homebuyers must decide whether to wait or not, as there is no definitive answer, according to Fairweather. The timing of mortgage rate drops is unpredictable, making it challenging to plan one's life around it."

What to do if you're a buyer or a seller

In Dallas, Texas, the percentage of listings remaining on the market for at least 30 days has increased from 53% to 60.5%, indicating a significant rise in unsold inventory.

In Fort Lauderdale, Florida, the percentage of unsold listings that have remained on the market for at least 30 days has increased from 68.2% to 75.5%, according to Redfin.

In Tampa and Jacksonville, Florida, the percentage of unsold homes that have been on the market for 30 days has increased. In Tampa, the percentage rose from 61.9% to 68.7%, while in Jacksonville, it increased from 62.9% to 69.2%, according to Redfin data.

Divounguy stated that when buyers are given more options, they possess greater bargaining power.

If homes for sale in your area are taking longer to sell, "there's probably an opportunity to get a property for under its listed price," Fairweather said.

If you discover problems during the home inspection that were not visible during the initial walkthrough or disclosed by the seller, it may be necessary to request repairs from the seller.

Fairweather advised against being overly particular and requesting every minor repair, such as chipped paint.

Not only do many homeowners have record home equity, they also have low mortgage payments, which is still favorable for home sellers in other markets, according to Divounguy.

To attract buyers, a home seller who needs to move this year due to life changes and is in an area with high unsold listings may need to lower their asking price.

"Price cuts sell homes," he said.