If you have wondered why there are not more homes for sale even though mortgage rates have come down from their peak, the answer has a name: the lock-in effect. And it has been one of the dominant forces shaping our market for the past two years. But something is starting to shift and it is worth understanding.

Here is how the lock-in effect works. During the pandemic, millions of homeowners refinanced their mortgages at rates between 2.5% and 4%. Those same homeowners now face a situation where selling their home and buying a new one means trading their 3% mortgage for a 6% mortgage. For a lot of people the math does not work, so they stay put. According to Moody’s chief economist Mark Zandi, this dynamic has kept people in their homes far longer than they historically would have stayed.

But here is what is changing. The number of homeowners with mortgage rates over 6% has now surpassed the number of those with the pandemic-era low rates. That is a meaningful milestone. It means a growing portion of the homeowner population no longer has that lock-in friction holding them back from selling. The pool of potential sellers is slowly growing.

What this means practically for our market in Chester, Bucks, Delaware, Montgomery, Berks, Lancaster, and Lehigh Counties is that we should see gradual inventory improvement over the next 12 to 18 months. Analysts project suburban Philadelphia inventory rising about 10% in 2026 compared to last year. That is not a flood of new listings but it is movement in the right direction for buyers who have been frustrated by the lack of options.

For sellers, the window to benefit from ultra-low inventory conditions is still open but it is not going to stay open forever. As more homeowners shake loose from the lock-in effect, competition among sellers will gradually increase. Pricing your home correctly and presenting it beautifully matters more every month.

For buyers, the gradual inventory improvement is welcome news. More options, slightly less frenzy compared to 2022. But do not mistake gradual improvement for a buyer’s market because we are still very firmly in seller’s market territory across most of our area. The strategic move is to get pre-approved, know your priorities, and be ready to act when the right house comes up.