Home prices stabilize as buyers get a jump on spring shopping
U.S. home values increased by 6.2% year-over-year, now averaging $329,542, but sales are hindered by low seller inventory, the second-lowest January count on record.
Despite a slight uptick in buyer activity, the 230,000 new listings in January were 17% lower than last year's record low. Buyers may be encouraged by declining mortgage rates from 7.08% to 6.09% since November. However, rising rates in early February threaten to dampen both supply and demand, as current homeowners with lower rates are reluctant to sell.
Overall, the housing market remains competitive, but widespread bidding wars are unlikely compared to previous years.
- U.S. home values up 6.2% YoY.
- Buyers are returning, with pending listings down only 20% from the previous year.
- Lower mortgage rates have improved buyer affordability, decreasing the typical mortgage cost from $2,310 to $2,100.
- New listings in January were 17% fewer than last year's record low of 276,000.
- January's inventory was 450,000 lower than in January 2020.
- Rising mortgage rates may deter sellers and potential buyers.
Mortgage rates and homeowners' decision to list will determine whether momentum continues
- U.S. home values are up
6% from a year ago and are39% higher than in 2020. - Buyers took advantage of slightly lower mortgage rates in January — sales are close to 2020 levels.
- Sellers are hanging back, with inventory at the second-lowest January level on record.
SEATTLE, Feb. 21, 2023 /PRNewswire/ -- Home sales are ticking up and price declines are leveling off as buyers ready for the spring sales season. But sellers have yet to join the fray — the number of homes for sale is the second-lowest on record — meaning stiff competition for well-priced homes, according to the latest Zillow® market report1. What mortgage rates do next will have a huge impact on the market's momentum.
"Now as a buyer, you can slow down, have your inspection and make a strong, well-informed offer," said Ryan Platzke, Realtor at Helgeson/Platzke Real Estate Group and member of Zillow's Premier Agent program in Minneapolis. "And as a seller you are still in a very good position; you won't see the 10 offers all cash, noncontingent, etc. But you will see one, maybe three offers, usually that first or second weekend, where you'll be able to select which one to go forward with and comfortably make a decision."
The typical U.S. home value was nearly flat from December to January, slipping just
Buyers returning, but potential sellers opt out
The number of people buying homes has ticked up since the fall and is looking like a normal, pre-pandemic January. At a low point in November, newly pending listings were down
Previously priced-out buyers were likely encouraged by mortgage rates that fell from a peak of
But while buyers are returning to the market, homeowners are opting not to list their homes. The 230,000 new listings in January were by far the lowest total in Zillow records that begin in 2018;
The 825,000 homes on the market in January was the second-lowest total in several years, and about 450,000 fewer than were ever on the market in January 2020.
This means competition for well-priced houses is stronger than before the pandemic, but don't expect the widespread bidding wars of 2021 and early 2022.
It took a median of 31 days for a home to sell in January, indicating that buyer competition for attractive listings is livelier than pre-pandemic norms (more than 40 days to pending), but not as furious as in 2022 (nine days to pending) or 2021 (17 days to pending).
Will sellers return? If they do, what mortgage rates will buyers be facing?
In the first two weeks of February, mortgage rates shot up by as much as 0.75 of a percentage point, proving that no one can count on a consistent downward trajectory for rates this year. Continued rate hikes would stunt supply as well as demand. Homeowners with very low mortgage rates will be reluctant to sell and have to buy another home with a much higher rate. Meanwhile, buyers are already straining their budgets to get into a mortgage. Sellers waiting for peak demand to try to get the best price for their listing may find few buyers able to afford it.
"The risk for sellers waiting till April or May to list is that no one knows what mortgage rates will do in the meantime," said Zillow senior economist Jeff Tucker. "Buyers may return to hibernation if last month's mortgage-rate thaw turned out to be a false spring."
This is the first monthly market report that refers to the newly launched version of the Zillow Home Value Index (ZHVI), now based on the neural network-driven Zestimates formula that Zillow produces for nearly every home in the United States. The new ZHVI, like the neural Zestimate, now better reflects seasonal changes; prices tend to trend up in the spring and down in the fall and winter.
Metropolitan | January | ZHVI | ZHVI | Monthly | Monthly | Total | Median |
United States | 6.2 % | -0.1 % | 45.8 % | -35.7 % | 22 | ||
New York, NY | 4.1 % | 0.7 % | 40.6 % | -42.9 % | 7 | ||
Los Angeles, | 0.1 % | -0.7 % | 39.4 % | -27.8 % | 23 | ||
Chicago, IL | 3.7 % | 0.6 % | 40.2 % | -45.8 % | 13 | ||
Dallas–Fort | 4.5 % | -0.7 % | 45.8 % | -35.0 % | 19 | ||
Philadelphia, PA | 7.0 % | 0.4 % | 45.4 % | -35.6 % | 6 | ||
Houston, TX | 5.3 % | -0.7 % | 45.9 % | -25.3 % | 29 | ||
Washington, DC | 1.8 % | 0.0 % | 38.6 % | -28.8 % | 10 | ||
Miami–Fort Lauderdale, FL | 12.8 % | -0.2 % | 55.6 % | -37.4 % | 22 | ||
Atlanta, GA | 6.1 % | -0.4 % | 47.5 % | -32.8 % | 29 | ||
Boston, MA | 3.4 % | -0.3 % | 41.5 % | -30.7 % | 7 | ||
San | -4.9 % | -0.4 % | 32.1 % | 0.0 % | 23 | ||
Detroit, MI | 5.4 % | 0.4 % | 43.0 % | -29.4 % | 18 | ||
Riverside, CA | 2.5 % | -0.9 % | 42.6 % | -28.7 % | 39 | ||
Phoenix, AZ | 0.3 % | -0.6 % | 39.0 % | 2.8 % | 49 | ||
Seattle, WA | -0.8 % | -0.2 % | 38.0 % | 4.7 % | 32 | ||
Minneapolis– | 1.6 % | -0.5 % | 38.5 % | -38.9 % | 31 | ||
San Diego, CA | 1.1 % | -0.6 % | 41.1 % | -37.7 % | 25 | ||
St. Louis, MO | 6.5 % | 0.4 % | 44.8 % | -48.2 % | 4 | ||
Tampa, FL | 8.2 % | -0.5 % | 50.7 % | -17.0 % | 27 | ||
Baltimore, | 4.0 % | 0.9 % | 40.0 % | -43.9 % | 8 | ||
Denver, CO | -0.2 % | -0.1 % | 37.6 % | -18.8 % | 24 | ||
Pittsburgh, | 3.7 % | 0.2 % | 41.0 % | -32.9 % | 15 | ||
Portland, OR | -0.2 % | -0.5 % | 37.1 % | -20.1 % | 30 | ||
Charlotte, NC | 6.4 % | -0.5 % | 47.6 % | -14.9 % | 20 | ||
Sacramento, | -2.6 % | -1.2 % | 35.1 % | -23.8 % | 29 | ||
San Antonio, | 5.3 % | -0.2 % | 45.1 % | -11.2 % | 36 | ||
Orlando, FL | 8.4 % | -0.8 % | 51.0 % | -18.5 % | 29 | ||
Cincinnati, | 6.1 % | 0.0 % | 44.7 % | -36.4 % | 5 | ||
Cleveland, OH | 7.8 % | 0.0 % | 46.5 % | -45.9 % | 9 | ||
Kansas City, | 7.1 % | 0.4 % | 45.7 % | -42.7 % | 7 | ||
Las Vegas, NV | 0.5 % | -1.2 % | 40.2 % | -11.9 % | 52 | ||
Columbus, | 7.8 % | 0.0 % | 47.9 % | -34.0 % | 4 | ||
Indianapolis, | 5.4 % | -0.6 % | 45.0 % | -22.7 % | |||
San Jose, CA | -2.3 % | -1.1 % | 38.4 % | -17.4 % | 20 | ||
Austin, TX | -1.1 % | -1.0 % | 39.1 % | 29.1 % | 50 | ||
Virginia | 5.3 % | 0.3 % | 42.9 % | -46.2 % | 11 | ||
Nashville, TN | 6.4 % | -0.1 % | 47.8 % | -18.0 % | 35 | ||
Providence, | 7.0 % | 0.2 % | 46.0 % | -58.6 % | 10 | ||
Milwaukee, | 6.3 % | 0.7 % | 42.7 % | -3 | |||
Jacksonville, | 9.3 % | -0.9 % | 52.7 % | -13.5 % | |||
Memphis, TN | 7.4 % | 0.0 % | 47.6 % | -20.2 % | 14 | ||
Oklahoma | 8.3 % | -0.9 % | 49.0 % | -23.4 % | 14 | ||
Louisville, KY | 5.2 % | 0.3 % | 42.9 % | -33.9 % | 8 | ||
Hartford, CT | 8.6 % | 0.0 % | 48.2 % | -66.9 % | 2 | ||
Richmond, VA | 8.6 % | 0.2 % | 48.2 % | -46.9 % | 4 | ||
New Orleans, | 0.6 % | 1.7 % | 34.0 % | 31.4 % | 36 | ||
Buffalo, NY | 6.3 % | -0.4 % | 45.0 % | -45.4 % | 10 | ||
Raleigh, NC | 5.0 % | -0.5 % | 46.0 % | -26.7 % | |||
Birmingham, | 7.5 % | 0.7 % | 46.4 % | -23.0 % | 16 | ||
Salt Lake City, | 0.0 % | 0.1 % | 37.5 % | 0.3 % | 38 |
*Table ordered by market size
1 The Zillow Real Estate 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.
2 U.S. weekly averages of 30-year fixed-rate mortgages as reported in the Freddie Mac Primary Mortgage Market Survey® (PMMS).
About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠ , which houses ShowingTime®, Bridge Interactive®, and dotloop® and interactive floor plans. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
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SOURCE Zillow
FAQ
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