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s the spring homebuying season approaches, economists are bracing for a potentially volatile market. Despite weak demand and elevated mortgage rates, buyers may be enticed by "deals on the margins" – price cuts that could become more prevalent this spring. However, sellers will need to show up too, as January saw an unusually high number of pulled listings.

    The recent inflation report has dashed hopes for significant rate drops in the near future. Mortgage rates have fallen slightly for four consecutive weeks, but new data suggests this trend may reverse. The 30-year fixed-rate mortgage averaged 6.87% last week, down from 6.89% the previous week. However, the Mortgage Bankers Association notes that refinance applications rebounded by 10% compared to the previous week.

    Price cuts are on the rise, with nearly 23% of listings receiving a price cut in January – the highest share on record for this time of year, according to Zillow. Altos Research also reports that more sellers reduced prices in the last week of January compared to a year ago. This trend is "unusual," says Mike Simonsen, founder of Altos.

    The combination of price cuts and increased inventory may be enough to rekindle buyer demand as the weather warms up. Skylar Olsen, chief economist at Zillow, notes that buyers have more power to negotiate than in any January over the past five years. However, sellers will need to decide whether to wait for buyers or relist their properties.

    An analysis of CoreLogic data by The Wall Street Journal found that nearly 73,000 home listings were pulled in January – the highest monthly total in 10 years. While this suggests sellers are frustrated with slowing demand, they may be willing to relist and take a price cut on their listing or give up their low mortgage rate.