Home listings surge as rising mortgage rates push some buyers to sidelines

New housing inventory grew rapidly in June as the recent spike in mortgage rates pushed some buyers to the sidelines. That's easing an acute supply shortage, but affordability continues to be a headache for house-hunters, given the combination of rising rates and record-high asking prices.

Active home listings grew at an annual rate of 18.7% in June compared to a year earlier — the fastest pace since 2017, according to a new report from Realtor.com. Because some buyers are getting priced out of the market, homes are sitting on the market for longer and easing the inventory crunch, it added.

During the pandemic, many Americans wanted either relocated or moved into bigger homes amid a shift to remote work, while new home construction trailed off due to labor and supply issues. Facing an inventory logjam, buyers competed with all-cash offers and waived contingencies to secure deals, driving housing prices to new records. Even as the inventory drought is now easing, prices — and mortgage rates — continue to creep upward.