Withdrawn Listings Signal a Housing Inflection Point: Seizing Contrarian Opportunities

The U.S. housing market is at a crossroads. After years of breakneck appreciation, withdrawn listings—home listings pulled off the market due to lack of buyer interest—are surging, signaling a critical inflection point. For contrarian investors, this is a golden opportunity to capitalize on overlooked regional markets where strong employment fundamentals clash with overcorrected housing prices.

The Withdrawal Surge: A Symptom of Seller Exhaustion

Nationwide, 16.8% of homes were price-cut or withdrawn in February 2025, up from 14.6% in 2024 (). This spike reflects “seller exhaustion,” where homeowners, faced with stagnant demand and rising mortgage rates (now averaging 6.5%–6.8%), are forced to lower prices or abandon listings altogether.

The data is stark: homes now linger 66 days on the market, five days longer than in 2024. Yet this pain point is a buyer's advantage. Markets with the highest withdrawal rates—like Dallas-Fort Worth (DFW) and Florida's Cape Coral—are precisely where strategic investments could yield outsized returns.

Contrarian Play: Strong Jobs, Weak Prices = Undervalued Markets

The key to success lies in identifying regions where employment growth outpaces housing market corrections. Two standout areas emerge:

1. Dallas-Fort Worth (DFW): Correcting Prices, Booming Jobs

DFW's housing inventory hit decade-high levels, yet its economy is firing on all cylinders. Rockwall County, for instance, reached record employment of 71,902 in April 2025 (), driven by finance, healthcare, and tech.

• Price Adjustments: Rockwall saw a 17% price correction, leading to a 90% surge in new construction sales.
• Collin County: A 9% price drop triggered a 44% rise in transactions, proving buyers pounce when pricing aligns with fundamentals.

Investment Play: Target REITs like Vornado Realty Trust (VNO) or Prologis (PLD), which focus on industrial and multifamily assets in DFW. Alternatively, direct purchases in suburbs like Rockwall, where homes now sell at 2%–3% below peak prices, offer leverage.

2. Rochester, NY: A Stealth Market with Hidden Strength

While Florida's Cape Coral struggles (private sector employment fell 0.6% in early 2025), Rochester, NY, boasts stable small business employment and a 5.0% unemployment rate.

• Undervalued Housing: Median home prices in Rochester dipped 0.5% year-over-year, despite a 15% vacancy rate in rental markets.
• Jobs Anchor the Market: Sectors like healthcare and advanced manufacturing—Rochester's economic pillars—are resilient.

Investment Play: Look to Realty Income (O), which owns income-generating properties in midsize metros like Rochester. Direct buyers can also find single-family rentals at discounts, given the mismatch between strong tenant demand and weak home sales.

Avoiding the Traps: Regions to Steer Clear Of

Not all markets offer value. Cape Coral, FL, for example, saw a 1,600-job private sector loss in early 2025, exacerbating its housing slump. Meanwhile, New York City's overpriced urban cores face suburban exodus and stagnant demand.

Expert Insight: “Buy When Sellers Quit”

“The data is clear: markets with high withdrawal rates and robust employment are undervalued,” says Dr. Sarah Chen, a housing economist at the Dallas Fed. “Buyers who act now can secure assets at 10%–20% discounts, a correction that aligns prices with reality.”

Final Call to Action

The housing inflection point is here. Investors who ignore the withdrawal surge risk missing the next wave of gains. Focus on:
1. DFW's price-corrected suburbs (Rockwall, Collin) with job growth.
2. Undervalued midsize metros like Rochester, NY, where fundamentals exceed market sentiment.
3. REITs with exposure to industrial and multifamily assets in these regions.

As seller exhaustion peaks, this is the time to buy fear and sell hope—a contrarian's mantra for the next boom.