Rate drops, more inventory add intrigue to housing 'offseason'

Rhea-AI Summary

Zillow's latest market report reveals a window of opportunity for home buyers due to lower mortgage rates and rising inventory. The monthly payment on a typical home has fallen by more than $100 nationwide since May, improving affordability. Key findings include:

- The Zillow market heat index shifted from favoring sellers to neutral in July.
- Homes are taking longer to sell, but still faster than pre-pandemic times.
- Nearly 1.18 million homes are on the market, the highest since September 2020.
- The share of listings with price cuts decreased in August to just under 26%.
- One-third of homes sold in July went for more than asking price.

These trends suggest that competition among buyers could extend into the fall, contrary to typical seasonal patterns. The report highlights opportunities for both buyers and sellers in this evolving market landscape.

Positive

• Monthly mortgage payments have decreased by over $100 nationwide since May, improving affordability
• Inventory has increased to nearly 1.18 million homes, the highest since September 2020
• One-third of homes sold in July went for more than asking price
• Homes are still selling relatively quickly, in 20 days on average

Negative

• The Zillow market heat index shifted from favoring sellers to neutral in July
• Homes are taking longer to sell compared to recent history
• The share of listings with price cuts remains high at just under 26%
• Inventory is still 30.8% lower than before the pandemic

Financial Analyst

The recent drop in mortgage rates and increase in inventory are creating a unique opportunity for homebuyers in an usually slow season. With monthly mortgage payments falling by $100 nationwide since May, affordability has improved substantially. This shift could extend buyer competition into the fall, potentially supporting home prices.

Key points to consider:

• The Zillow market heat index has moved from favoring sellers to neutral territory.
• Homes are taking longer to sell, but still faster than pre-pandemic levels.
• Inventory has grown to 1.18 million homes, the highest since September 2020.
• 26% of listings had price cuts in August, which is high but not record-breaking.

These factors suggest a more balanced market, which could benefit both buyers and sellers in the coming months. However, well-priced homes are still selling quickly, indicating that demand remains strong in many areas.

Real Estate Market Analyst

This report indicates a subtle but significant shift in the housing market dynamics. The improved affordability due to lower mortgage rates could reignite buyer interest, potentially disrupting the typical autumn cooldown. However, it's important to note regional variations:

• Markets like Miami, Tampa and Austin are now favoring buyers.
• Strong seller's markets persist in New York, Boston and San Jose.
• Many large metros remain in a neutral position.

The median days on market and share of listings with price cuts are key indicators to watch. While the national average is 20 days and 25.9% respectively, these figures vary widely across metros, reflecting local market conditions. This data suggests opportunities for both buyers and sellers, depending on their specific location and property type.

Economic Analyst

The housing market's current state reflects broader economic trends and could have significant implications for the overall economy. Key observations:

• Lower mortgage rates improve affordability, potentially stimulating housing demand and related economic activities.
• Increased inventory suggests a gradual normalization of the market after years of shortages.
• The shift towards a more balanced market could help moderate housing inflation, a major component of overall inflation measures.

However, it's important to note that inventory levels are still 30.8% below pre-pandemic levels nationally. This ongoing supply constraint, combined with improved affordability, could maintain upward pressure on home prices in many areas. The housing market's trajectory in the coming months will be a important indicator of consumer confidence and overall economic health, particularly as we navigate uncertain economic conditions.

Competition among buyers is likely to extend into the fall thanks to improved affordability

• Monthly mortgage payments have fallen by more than $100 nationwide since peaking in May.
• Price cuts ticked down in August but are still common, landing on more than 1 in 4 listings.
• Competition is stiff for attractive listings, with more than one-third of homes selling for over asking price.

SEATTLE, Sept. 12, 2024 /PRNewswire/ -- Lower mortgage rates and rising inventory are giving home buyers a window of opportunity at an unusual time of year, according to the latest market report¹ from Zillow®. Affordability has improved substantially for home buyers, and competition among them could extend into the fall instead of fading away as is typical at this time of year.

"Late summer may be an opportunity for buyers who have been waiting in the wings for a monthly mortgage payment they can qualify for," said Skylar Olsen, Zillow chief economist. "Buyers have more options to choose from for two reasons. For one, it's easier to qualify for more of the homes on the market now that mortgage rates are a bit lower. Beyond that, more inventory is becoming available — enough to improve buyer negotiating power. Attractive properties in hot markets are still selling quickly, but some metros — or neighborhoods within them — have flipped further in favor of buyers."

Mortgage rate declines have made buying a home roughly affordable again at the national level (meaning monthly payments generally take less than one-third of median household income), assuming a buyer puts 20% down and before taxes and insurance are accounted for. Nationwide, the monthly payment on a typical home purchase has fallen by more than $100 since a peak in May. That drop is more than $300 a month in the ultraexpensive San Francisco metro area. 

Beyond lower costs, a number of metrics are moving in buyers' favor. The Zillow market heat index shifted from being in favor of sellers into neutral territory in July. For the past two years, sellers held their edge nationally until October. 

Homes are taking longer to sell than in recent history, but shorter than in pre-pandemic times. Homes that sold in August took 20 days to go pending, two more than in July, but about six days faster than at this time of year before the pandemic. And while inventory growth has slowed, nearly 1.18 million homes are on the market, more than any month since September 2020. 

Lower rates could stall or slow a normal autumn cooldown, because right now buyers are more likely to be motivated by lower rates than sellers are. 

Some signals are already pointing to an altered trajectory in the housing market. The share of listings on Zillow with a price cut ticked down from July to August, reversing an upward trend of rising every month since March. Just under 26% of homes on the market had a price cut in August. That's relatively high for this time of year, but not a record, as seen in recent months. 

Opportunities for buyers

• Lower rates mean improved affordability: Purchasing power is greater, and buying a house may now fit into buyers' monthly budgets. 
• Homes are taking longer to sell, giving buyers more time to decide and more leverage in negotiations.
• Inventory continues to slowly recover from a years-long shortfall, giving buyers more options.

Opportunities for sellers

• Well-priced and -marketed homes are still selling relatively quickly, in 20 days, almost a week faster than at this time of year before the pandemic.
• Lower mortgage rates could raise buyer competition in the fall. The share of homes with a price cut dropped in August. 
• One-third of homes that sold in July — the most recent data available — went for more than asking price.
• Seventy percent of sellers turn around and buy — the benefits to buyers given above apply to their next home. 

Metropolitan Area*	August Zillow Home Value Index (ZHVI) (Raw)	Market Favors**	Typical Mortgage Payment***	Typical Mortgage Payment Change, Month over Month	Median Days on Market Before Going Pending	Share of Listings With a Price Cut	Inventory Change Since Before the Pandemic
United States	$362,143	neutral	$1,827	-3.4 %	20	25.9 %	-30.8 %
New York, NY	$676,836	strong seller	$3,399	-3.0 %	27	13.3 %	-54.4 %
Los Angeles, CA	$956,784	seller	$4,782	-3.0 %	18	20.9 %	-30.6 %
Chicago, IL	$325,651	seller	$1,640	-3.2 %	12	26.0 %	-50.6 %
Dallas, TX	$372,980	neutral	$1,884	-3.7 %	31	34.8 %	-8.1 %
Houston, TX	$307,366	neutral	$1,553	-3.6 %	34	29.9 %	-12.6 %
Washington, DC	$567,618	strong seller	$2,860	-3.4 %	11	23.0 %	-44.4 %
Philadelphia, PA	$366,585	seller	$1,846	-3.3 %	11	22.9 %	-48.0 %
Miami, FL	$489,781	buyer	$2,473	-3.5 %	45	22.0 %	-11.6 %
Atlanta, GA	$383,408	neutral	$1,936	-3.6 %	29	32.1 %	-14.8 %
Boston, MA	$699,791	strong seller	$3,520	-3.3 %	11	19.3 %	-44.4 %
Phoenix, AZ	$456,508	neutral	$2,311	-3.8 %	30	33.3 %	-20.5 %
San Francisco, CA	$1,149,479	strong seller	$5,803	-3.6 %	16	18.9 %	-4.1 %
Riverside, CA	$583,804	seller	$2,943	-3.3 %	23	23.7 %	-32.9 %
Detroit, MI	$254,757	seller	$1,286	-3.5 %	11	25.8 %	-38.1 %
Seattle, WA	$740,004	seller	$3,718	-3.4 %	14	27.5 %	-26.3 %
Minneapolis, MN	$375,730	strong seller	$1,894	-3.5 %	21	26.9 %	-35.8 %
San Diego, CA	$943,960	seller	$4,767	-3.6 %	19	27.0 %	-36.1 %
Tampa, FL	$378,042	buyer	$1,914	-3.8 %	37	35.6 %	9.5 %
Denver, CO	$582,046	neutral	$2,931	-3.5 %	23	35.7 %	-2.6 %
Baltimore, MD	$386,072	seller	$1,949	-3.6 %	9	25.5 %	-49.2 %
St. Louis, MO	$252,843	seller	$1,273	-3.3 %	7	24.4 %	-47.6 %
Orlando, FL	$397,206	buyer	$2,008	-3.6 %	32	31.2 %	9.7 %
Charlotte, NC	$381,083	neutral	$1,926	-3.6 %	25	27.9 %	-3.7 %
San Antonio, TX	$284,322	neutral	$1,439	-3.8 %	42	32.3 %	12.6 %
Portland, OR	$547,350	seller	$2,758	-3.5 %	21	29.2 %	-24.4 %
Sacramento, CA	$579,242	seller	$2,924	-3.6 %	17	28.8 %	-34.8 %
Pittsburgh, PA	$215,178	neutral	$1,092	-3.7 %	15	29.3 %	-40.6 %
Cincinnati, OH	$286,903	seller	$1,446	-3.3 %	7	29.8 %	-37.7 %
Austin, TX	$453,837	buyer	$2,296	-3.9 %	58	30.2 %	30.5 %
Las Vegas, NV	$433,110	seller	$2,179	-3.1 %	21	27.6 %	-27.3 %
Kansas City, MO	$303,802	seller	$1,529	-3.4 %	10	30.8 %	-44.0 %
Columbus, OH	$315,751	seller	$1,590	-3.4 %	8	31.9 %	-29.7 %
Indianapolis, IN	$280,720	neutral	$1,417	-3.5 %	13	33.7 %	-20.6 %
Cleveland, OH	$232,456	strong seller	$1,171	-3.1 %	8	24.4 %	-56.8 %
San Jose, CA	$1,588,006	strong seller	$7,903	-2.7 %	13	18.5 %	-26.0 %
Nashville, TN	$440,163	neutral	$2,224	-3.6 %	27	34.5 %	-10.5 %
Virginia Beach, VA	$353,185	seller	$1,777	-3.3 %	25	25.2 %	-47.8 %
Providence, RI	$490,822	strong seller	$2,463	-2.9 %	10	22.2 %	-61.4 %
Jacksonville, FL	$358,068	buyer	$1,812	-3.7 %	49	32.5 %	4.9 %
Milwaukee, WI	$349,218	seller	$1,759	-3.3 %	19	19.4 %	-29.7 %
Oklahoma City, OK	$234,943	neutral	$1,185	-3.5 %	21	30.6 %	-14.8 %
Raleigh, NC	$444,473	seller	$2,246	-3.6 %	20	34.5 %	-19.2 %
Memphis, TN	$238,246	buyer	$1,209	-3.8 %	34	28.5 %	0.9 %
Richmond, VA	$371,454	strong seller	$1,869	-3.3 %	10	26.1 %	-44.7 %
Louisville, KY	$259,165	neutral	$1,305	-3.3 %	10	29.2 %	-31.3 %
New Orleans, LA	$237,679	buyer	$1,206	-4.0 %	42	24.9 %	42.1 %
Salt Lake City, UT	$541,348	seller	$2,731	-3.6 %	19	34.1 %	-21.0 %
Hartford, CT	$366,985	strong seller	$1,846	-3.1 %	7	18.4 %	-68.0 %
Buffalo, NY	$268,628	strong seller	$1,354	-3.2 %	11	20.3 %	-44.1 %
Birmingham, AL	$250,032	neutral	$1,265	-3.7 %	24	25.7 %	-26.2 %

*Table ordered by market size
**According to Zillow's market heat index
*** Mortgage payment, excluding taxes and insurance, for a house valued at the Zillow Home Value Index for that location, bought at the average mortgage rate for August (6.5%), using a 20% down payment.
1	The Zillow® Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research.

About Zillow Group: 

Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences. 

Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Zillow Rentals®, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®. 

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2024 MFTB Holdco, Inc., a Zillow affiliate.

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FAQ

How much have monthly mortgage payments decreased since May 2024 according to Zillow (ZG)?

According to Zillow's report, monthly mortgage payments on a typical home have fallen by more than $100 nationwide since peaking in May 2024.

What percentage of home listings on Zillow (ZG) had a price cut in August 2024?

In August 2024, just under 26% of homes listed on Zillow had a price cut, which is a slight decrease from July but still relatively high for this time of year.

How many days does it take for a home to sell according to Zillow's (ZG) August 2024 report?

According to Zillow's August 2024 report, homes that sold took an average of 20 days to go pending, which is two days longer than in July but about six days faster than pre-pandemic times.

What is the current inventory level of homes on the market according to Zillow (ZG) in September 2024?

Zillow reports that nearly 1.18 million homes are on the market as of September 2024, which is the highest inventory level since September 2020.