Homeowners list while buyers hang back, pushing inventory higher
The latest Zillow market report reveals a significant increase in home listings, with a 13% rise compared to last year, signaling that homeowners are breaking free from rate lock. However, buyer hesitation persists, leading to a 22% year-over-year increase in inventory. Despite this, inventory remains 34% below pre-pandemic levels. Home value growth has slowed, with typical home values appreciating by 3.9% year-over-year in May, down from 4.4% in April. Zillow forecasts a modest 0.4% increase in home values for 2024, with a 1.4% decline anticipated through May 2025. Market conditions are becoming more favorable for buyers, with nearly 24% of homes for sale receiving price cuts in May. Regional disparities exist, with the West Coast and coastal South seeing the highest increase in new listings. Major Florida markets lead in overall inventory growth due to strong new construction.
- New listings rose nearly 13% year-over-year, indicating increased homeowner activity.
- Inventory levels rose by 22% compared to last year, reducing the pandemic-era deficit.
- Home value appreciation slowed to a healthier, more sustainable rate of 3.9% year-over-year in May.
- Zillow forecasts a modest increase in home values for 2024, with a slight decline by mid-2025.
- Increased inventory indicates a potential shift towards a more balanced market, favoring buyers.
- Strong new construction in major Florida markets has led to significant inventory growth.
- Buyer hesitation persists, with sales in May 6% lower than last year.
- Despite inventory growth, levels remain 34% below pre-pandemic norms.
- Home value growth is expected to slow further, with a 1.4% decline projected through May 2025.
- Nearly one-quarter of homes for sale received price cuts in May, indicating potential market softening.
- Inflation and high mortgage rates continue to impact first-time buyers, reducing their purchasing power.
Insights
The recent report from Zillow provides key insights into the current dynamics of the U.S. housing market. Notably, new listings have increased by
From a financial perspective, the cooling of home value appreciation, which slowed from
For retail investors, this shift toward a balanced market may present opportunities to invest in real estate at more reasonable prices. However, the ongoing high mortgage rates and inflation could continue to deter first-time buyers, impacting overall demand. This scenario needs to be monitored closely as it develops.
The Zillow report highlights a significant increase in new listings, particularly in markets like the West Coast and coastal South, including San Diego, Seattle, Charlotte and the San Francisco Bay Area. This regional data is important for investors to understand where supply is increasing the most, potentially leading to better buying opportunities in these areas. Additionally, the accumulation of inventory in major Florida markets due to strong new construction is another key point, as it suggests that builders are responding to the pent-up demand from the pandemic.
The shift in buyer behavior, with competition easing and more listings seeing price cuts, indicates a market transitioning from a strong seller's market to a more neutral one. Nearly one-quarter of homes for sale received a price cut in May, the highest share in the past six years for this time of year. For investors, this trend could mean more opportunities to negotiate better deals on properties.
Retail investors should consider these regional differences and the overall cooling market when making investment decisions. Markets that are shifting toward buyers might provide more negotiating power and potentially better long-term investment opportunities.
Home value growth eases along with competition – price relief may be on the horizon
- Homeowners are breaking free from rate lock — new listings rose nearly
13% since last year. - Inventory is accumulating, rising
22% over last year and reducing the pandemic-era deficit. - Home value appreciation slowed in May, and forecast points to prices easing over the next year.
"Rate lock's hold seems to be loosening — homeowners who may have put off listing their homes are done waiting. But just as more choices sprang up for sale, buyers turned on cruise control," said Orphe Divounguy, Zillow senior economist. "Inflation has hit younger households hardest, and stubbornly high rates have pushed a mortgage out of reach for many first-time buyers. That has cooled competition for houses. If these trends hold, we're likely to see price growth flatten or tick down over the next year."
Inventory infusion
New listings from sellers took a larger-than-average step up, rising
But buyers aren't matching sellers' enthusiasm; sales in May were
New listings rose the most annually on the West Coast and coastal South, in
Competition and appreciation ease
As a result, competition among buyers eased in May, and home price appreciation cooled with it. Growth in typical home values slowed from
Prices have fallen year over year in
Renters struggling to save up for a down payment may get a slight reprieve in the coming year. Zillow forecasts home values will end 2024 up
What it means for buyers and sellers
Zillow's market heat index shows the nation is becoming a bit friendlier for buyers and is headed toward "neutral" territory, but sellers still hold a slight advantage.
Nationwide, nearly one-quarter of all homes for sale received a price cut in May, the highest share in the past six years for this time of year. There's a good chance that buyers can purchase a lingering property for less than list price. This environment makes experienced agents all the more valuable for both buyers and sellers, to find and negotiate deals for buyers, and to price and market properties correctly for sellers.
Size | Metropolitan | May Zillow Home | ZHVI Change, | ZHVI Change | Market | Share of | Inventory | New Listings |
0 | 3.9 % | 45.3 % | Sellers | 23.9 % | 22.1 % | 12.6 % | ||
1 | 7.1 % | 31.6 % | Strong sellers | 13.8 % | -4.6 % | 7.3 % | ||
2 | 8.9 % | 42.8 % | Strong sellers | 18.1 % | 21.1 % | 21.3 % | ||
3 | 7.0 % | 35.7 % | Strong sellers | 21.1 % | 3.0 % | 6.6 % | ||
4 | 1.1 % | 46.9 % | Sellers | 32.0 % | 28.9 % | 12.5 % | ||
5 | 1.6 % | 38.6 % | Neutral | 28.3 % | 25.8 % | 11.6 % | ||
6 | 4.7 % | 30.7 % | Strong sellers | 19.7 % | 11.3 % | 16.7 % | ||
7 | 6.7 % | 43.8 % | Sellers | 20.6 % | 5.8 % | 12.2 % | ||
8 | 6.6 % | 62.0 % | Buyers | 24.5 % | 43.5 % | 10.8 % | ||
9 | 4.0 % | 56.3 % | Neutral | 28.0 % | 37.5 % | 23.4 % | ||
10 | 8.3 % | 42.5 % | Strong sellers | 16.9 % | 9.7 % | 15.6 % | ||
11 | 4.2 % | 53.0 % | Sellers | 35.2 % | 13.6 % | 26.6 % | ||
12 | 5.4 % | 25.5 % | Strong sellers | 18.6 % | 27.1 % | 29.0 % | ||
13 | 6.5 % | 52.1 % | Sellers | 22.9 % | 23.7 % | 16.7 % | ||
14 | 6.3 % | 40.4 % | Sellers | 18.1 % | 6.2 % | 7.8 % | ||
15 | 6.4 % | 44.8 % | Strong sellers | 22.8 % | 27.1 % | 31.4 % | ||
16 | 1.3 % | 27.4 % | Strong sellers | 21.7 % | 22.7 % | 15.4 % | ||
17 | 11.1 % | 56.8 % | Sellers | 22.9 % | 44.4 % | 32.5 % | ||
18 | 2.8 % | 61.8 % | Buyers | 36.2 % | 60.6 % | 24.7 % | ||
19 | 1.9 % | 36.1 % | Sellers | 32.9 % | 32.2 % | 24.5 % | ||
20 | 3.8 % | 31.3 % | Sellers | 21.9 % | 14.7 % | 16.3 % | ||
21 | 4.5 % | 40.2 % | Strong sellers | 19.5 % | 12.8 % | 5.8 % | ||
22 | 3.3 % | 54.6 % | Neutral | 30.0 % | 49.9 % | 20.7 % | ||
23 | 5.1 % | 59.1 % | Neutral | 24.9 % | 27.3 % | 30.4 % | ||
24 | -2.2 % | 34.7 % | Neutral | 32.5 % | 29.3 % | 3.9 % | ||
25 | 1.6 % | 32.3 % | Strong sellers | 25.8 % | 23.0 % | 14.2 % | ||
26 | 4.3 % | 34.5 % | Strong sellers | 25.0 % | 19.8 % | 21.4 % | ||
27 | 6.1 % | 33.3 % | Sellers | 23.1 % | 5.6 % | 13.0 % | ||
28 | 5.2 % | 47.5 % | Strong sellers | 22.0 % | 16.1 % | 12.1 % | ||
29 | -4.1 % | 42.4 % | Neutral | 30.7 % | 14.7 % | 14.6 % | ||
30 | 7.1 % | 44.4 % | Sellers | 23.3 % | 3.5 % | 23.1 % | ||
31 | 3.9 % | 45.8 % | Strong sellers | 23.3 % | 27.8 % | 15.5 % | ||
32 | 5.5 % | 49.7 % | Strong sellers | 24.3 % | 25.9 % | 21.8 % | ||
33 | 3.5 % | 50.7 % | Sellers | 27.9 % | 21.2 % | 12.2 % | ||
34 | 7.5 % | 46.3 % | Strong sellers | 18.7 % | 0.4 % | 7.1 % | ||
35 | 12.7 % | 41.7 % | Strong sellers | 14.5 % | 21.0 % | 28.5 % | ||
36 | 2.1 % | 48.7 % | Neutral | 32.8 % | 17.5 % | 13.5 % | ||
37 | 5.5 % | 41.0 % | Sellers | 19.5 % | 17.1 % | 10.1 % | ||
38 | 8.2 % | 51.6 % | Strong sellers | 15.4 % | 9.0 % | 11.0 % | ||
39 | 1.4 % | 52.3 % | Buyers | 32.7 % | 45.6 % | 16.2 % | ||
40 | 6.5 % | 42.3 % | Strong sellers | 11.4 % | 12.8 % | 17.1 % | ||
41 | 2.4 % | 42.9 % | Neutral | 27.2 % | 23.1 % | 12.6 % | ||
42 | 3.0 % | 53.4 % | Sellers | 29.2 % | 35.3 % | 29.1 % | ||
43 | 1.8 % | 46.6 % | Buyers | 27.1 % | 24.2 % | 5.1 % | ||
44 | 5.0 % | 46.9 % | Strong sellers | 20.7 % | 15.9 % | 12.6 % | ||
45 | 3.7 % | 37.0 % | Sellers | 23.9 % | 27.7 % | 20.1 % | ||
46 | -5.9 % | 5.0 % | Buyers | 27.0 % | 22.3 % | 5.8 % | ||
47 | 2.7 % | 46.3 % | Sellers | 30.1 % | 19.4 % | 14.2 % | ||
48 | 11.6 % | 56.3 % | Strong sellers | 12.0 % | 15.9 % | 16.2 % | ||
49 | 7.5 % | 51.4 % | Strong sellers | 14.5 % | 1.8 % | 2.6 % | ||
50 | 0.0 % | 37.6 % | Sellers | 24.1 % | 22.0 % | 12.0 % |
* | Table ordered by market size |
** | Based on Zillow Market Heat Index |
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 | Tracked by Zillow's Sales Count NowCast. |
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