Lowest-priced homes attracting strongest competition as market rebalances
A Zillow analysis reveals shifting dynamics in the housing market due to rising mortgage costs and declining affordability, with competition now strongest for lower-priced homes. Monthly mortgage payments have surged 60% year-on-year, pushing buyers toward more affordable options. While inventory for low-tier homes has increased slightly, sales across all categories have dropped, with U.S. home sales down 24.1% year-over-year. Sellers are adjusting to the market, providing buyers with more negotiating power, though home prices remain at or near record highs.
- Increased inventory for the lowest-priced homes by 10.4% year-over-year.
- Buyers now have more negotiating leverage compared to earlier pandemic periods.
- U.S. home sales decreased by 24.1% year-over-year.
- Monthly mortgage payments are 60% higher than last year, impacting affordability.
Inventory, sales and price-cut trends reveal how home buyers and sellers are adjusting to changing market conditions
- Competition for the lowest-priced homes in each market is now stronger than mid- and high-priced homes, reversing a pandemic trend.
- Monthly payments on a typical mortgage are
60% higher than they were a year ago, likely contributing to buyers gravitating toward less expensive homes.
SEATTLE, Aug. 16, 2022 /PRNewswire/ -- As home-buying demand cools from the record pace of 2021, competition is now hottest for the lowest-priced homes as mounting affordability obstacles stretch buyers' budgets, a new Zillow® analysis finds.
Throughout most of the pandemic, buyers shopping in the middle and top price tiers faced the strongest competition — inventory was relatively lower, and there were more sales. Now, inventory for the least expensive homes is tightest while the sales gap has closed.
"Buyers are stretched thin when it comes to affordability, and they are flocking to the lowest-priced homes on the market to get their foot in the door," said Zillow senior economist Nicole Bachaud. "Still, the less frenzied market compared to last year will feel like a breath of fresh air for those buyers who haven't been priced out. It's not yet a buyers market, but it's becoming a better time to buy, with more time to consider options and less chance of being dragged into a bidding war. Demand is lighter for homes at the top end of the market, and owners appear to be reluctant to sell and move to a different home that will presumably come with a much higher monthly payment at today's mortgage rates."
Shifts in inventory, sales and price cuts show the market is in the midst of rebalancing after perhaps the most competitive period ever. Home sellers are adjusting their expectations to the current reality, and buyers have more negotiating leverage than they have had since the onset of the pandemic. Still, home prices are at or near record highs, pushing buyers who remain in the market toward homes in the lower end of the price range.
At the end of July, inventory in the most expensive third of the housing market was up
Home sales at all price points are lower than they were during the same period in 2021, when more homes sold than in any year since 2006. The year-over-year sales decline — U.S. home sales are down
Along with inventory and sales volume, the share of listings with a price cut also indicates heavier demand for lower-priced homes. For much of the pandemic, the share of listings with a price cut tracked similarly across price tiers. During the past few months — as mortgage rates climbed from pandemic lows — a larger share of mid- and high-priced listings have been receiving a price cut as sellers are having a harder time attracting buyers.
For-Sale Inventory – Year- | Sales – YoY Change | Share of Listings with a | |||||||
Metro Area* | Low | Middle | High | Low | Middle | High | Low | Middle | High |
United States | 10.4 % | 17.3 % | 19.3 % | -14.2 % | -20.3 % | -25.4 % | 10.5 % | 12.6 % | 11.4 % |
New York, NY | -2.8 % | -3.2 % | 0.0 % | -18.8 % | -21.8 % | -23.5 % | 5.3 % | 6.5 % | 5.4 % |
Los Angeles, CA | 34.9 % | 27.5 % | 19.5 % | -24.3 % | -27.3 % | -27.0 % | 9.6 % | 12.0 % | 9.0 % |
Chicago, IL | -11.1 % | -9.8 % | -18.0 % | -14.2 % | -24.5 % | -23.3 % | 10.4 % | 11.8 % | 12.2 % |
Dallas–Fort Worth, TX | -0.5 % | 8.3 % | 14.3 % | -11.2 % | -19.0 % | -25.9 % | 13.1 % | 17.9 % | 15.6 % |
Philadelphia, PA | -7.3 % | -3.5 % | -4.0 % | -2.1 % | -11.7 % | -14.5 % | 9.1 % | 10.3 % | 9.8 % |
Houston, TX | 9.6 % | 12.8 % | 4.4 % | -1.2 % | -17.7 % | -22.9 % | 10.2 % | 13.3 % | 12.5 % |
Washington, DC | -15.3 % | 1.6 % | 9.9 % | -14.3 % | -22.3 % | -25.0 % | 10.5 % | 12.1 % | 12.2 % |
Miami–Fort Lauderdale, FL | -11.9 % | 5.0 % | 23.1 % | -8.2 % | -16.9 % | -29.6 % | 6.3 % | 9.2 % | 8.9 % |
Atlanta, GA | 42.2 % | 44.8 % | 20.0 % | -2.4 % | -8.3 % | -19.5 % | 12.1 % | 14.8 % | 12.7 % |
Boston, MA | 0.7 % | 4.3 % | 17.3 % | -41.9 % | -48.4 % | -49.8 % | 8.8 % | 10.1 % | 7.9 % |
San Francisco, CA | 39.7 % | 34.8 % | 37.3 % | -25.0 % | -31.6 % | -29.3 % | 10.5 % | 9.7 % | 8.9 % |
Detroit, MI | 9.3 % | 10.6 % | 16.7 % | -19.0 % | -25.3 % | -29.7 % | 9.7 % | 12.8 % | 12.9 % |
Riverside, CA | 63.3 % | 79.6 % | 52.9 % | -20.5 % | -16.0 % | -32.6 % | 10.1 % | 12.5 % | 12.6 % |
Phoenix, AZ | 98.0 % | 70.8 % | 57.7 % | -18.2 % | -14.4 % | -23.7 % | 19.8 % | 21.8 % | 18.0 % |
Seattle, WA | 62.6 % | 67.5 % | 80.2 % | -14.1 % | -23.7 % | -28.6 % | 15.2 % | 16.9 % | 13.5 % |
Minneapolis–St. Paul, MN | -3.8 % | 4.0 % | 13.9 % | -11.4 % | -14.4 % | -15.1 % | 10.1 % | 11.6 % | 10.9 % |
San Diego, CA | 39.3 % | 39.5 % | 38.8 % | -7.6 % | -39.3 % | -33.9 % | 15.4 % | 15.6 % | 13.1 % |
St. Louis, MO | -14.3 % | -8.5 % | -2.8 % | -29.2 % | -25.0 % | -19.1 % | 9.0 % | 12.1 % | 12.2 % |
Tampa, FL | 38.2 % | 63.8 % | 48.9 % | 1.5 % | -11.4 % | -23.6 % | 13.8 % | 18.7 % | 16.8 % |
Baltimore, MD | -4.7 % | -17.1 % | -9.5 % | -12.0 % | -19.4 % | -20.9 % | 10.8 % | 11.5 % | 11.3 % |
Denver, CO | 63.3 % | 54.3 % | 45.3 % | -16.5 % | -8.8 % | -26.0 % | 17.2 % | 20.4 % | 17.6 % |
Pittsburgh, PA | 3.8 % | -3.0 % | -5.2 % | 19.2 % | -2.7 % | -12.0 % | 10.6 % | 11.7 % | 11.3 % |
Portland, OR | 31.6 % | 37.6 % | 27.4 % | -25.0 % | -26.6 % | -27.6 % | 14.2 % | 16.6 % | 13.1 % |
Charlotte, NC | 38.8 % | 41.4 % | 20.7 % | -19.3 % | -16.6 % | -20.0 % | 14.3 % | 18.6 % | 16.1 % |
Sacramento, CA | 70.7 % | 74.5 % | 52.0 % | -22.6 % | -19.9 % | -36.7 % | 16.8 % | 17.6 % | 15.2 % |
San Antonio, TX | 7.8 % | 31.8 % | 28.7 % | -5.3 % | -20.2 % | -14.3 % | 11.3 % | 15.0 % | 13.8 % |
Orlando, FL | 22.8 % | 42.0 % | 34.6 % | -8.0 % | -12.3 % | -29.3 % | 11.3 % | 14.6 % | 13.9 % |
Cincinnati, OH | -2.9 % | 2.6 % | -11.3 % | 11.6 % | 2.4 % | -17.1 % | 10.6 % | 13.0 % | 12.2 % |
Cleveland, OH | -1.6 % | -14.1 % | -4.5 % | -3.9 % | -10.8 % | -17.5 % | 9.0 % | 12.6 % | 12.6 % |
Kansas City, MO | 6.6 % | -6.5 % | 17.2 % | -15.8 % | -13.6 % | -3.9 % | 11.7 % | 13.3 % | 11.0 % |
Las Vegas, NV | 86.5 % | 113.9 % | 85.6 % | -15.8 % | -26.0 % | -33.2 % | 17.2 % | 20.4 % | 18.5 % |
Columbus, OH | 2.2 % | 4.7 % | -5.2 % | -5.1 % | 5.6 % | -15.9 % | 12.4 % | 13.0 % | 13.7 % |
Indianapolis, IN | 14.5 % | 16.5 % | 21.1 % | 20.4 % | 7.5 % | -6.2 % | 11.4 % | 14.2 % | 15.6 % |
San Jose, CA | 18.9 % | 39.8 % | 46.4 % | -36.9 % | -30.2 % | -31.4 % | 12.0 % | 12.1 % | 10.1 % |
Austin, TX | 50.1 % | 40.1 % | 49.7 % | -13.3 % | -22.5 % | -32.0 % | 16.5 % | 17.6 % | 14.0 % |
Virginia Beach, VA | -24.8 % | -12.1 % | -14.6 % | 1.5 % | -18.2 % | -33.6 % | 6.6 % | 9.3 % | 8.6 % |
Nashville, TN | 48.5 % | 59.6 % | 78.4 % | -1.4 % | -18.5 % | -30.2 % | 14.1 % | 17.7 % | 14.9 % |
Providence, RI | -1.0 % | 2.3 % | -5.0 % | -27.9 % | -33.8 % | -42.6 % | 10.2 % | 9.2 % | 8.1 % |
Milwaukee, WI | -21.4 % | -18.1 % | -5.5 % | -9.6 % | -29.0 % | -41.0 % | 5.2 % | 5.6 % | 5.5 % |
Jacksonville, FL | 14.7 % | 44.1 % | 39.2 % | 6.0 % | -1.3 % | -26.9 % | 14.5 % | 17.5 % | 15.8 % |
Memphis, TN | 9.8 % | 3.5 % | 6.5 % | 19.4 % | -1.4 % | -11.7 % | 7.1 % | 7.8 % | 9.9 % |
Oklahoma City, OK | 8.6 % | 11.2 % | 4.0 % | -7.2 % | -12.7 % | -21.9 % | 10.0 % | 14.0 % | 13.0 % |
Louisville, KY | 5.2 % | -2.9 % | 2.0 % | -9.5 % | -16.2 % | -21.8 % | 12.2 % | 14.0 % | 12.6 % |
Hartford, CT | -24.1 % | -18.7 % | -10.0 % | -35.4 % | -19.6 % | -34.4 % | 6.7 % | 9.3 % | 8.8 % |
Richmond, VA | -19.4 % | -8.6 % | -11.7 % | 31.2 % | 29.6 % | 35.6 % | 10.4 % | 11.0 % | 8.0 % |
New Orleans, LA | 7.0 % | 40.9 % | 20.6 % | -1.7 % | -23.1 % | -34.1 % | 8.3 % | 13.4 % | 12.2 % |
Buffalo, NY | -33.0 % | -20.4 % | -6.3 % | -17.2 % | -6.0 % | -18.1 % | 5.9 % | 8.3 % | 7.6 % |
Raleigh, NC | 59.7 % | 97.6 % | 57.4 % | -18.0 % | -18.8 % | -31.3 % | 13.8 % | 18.9 % | 13.9 % |
Birmingham, AL | 17.6 % | 13.0 % | 10.6 % | -22.6 % | -18.8 % | -16.7 % | 10.4 % | 13.0 % | 10.7 % |
Salt Lake City, UT | 81.4 % | 74.9 % | 82.6 % | -19.7 % | -27.0 % | -38.2 % | 23.7 % | 23.3 % | 18.9 % |
*Table ordered by market size |
About Zillow Group
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FAQ
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