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Shifting Into Neutral: Housing Markets Balance as Sellers Lose Ground
New Zillow research highlights the shift toward a more balanced housing market as sellers lose their advantage due to rising inventory and slowing home price appreciation.
Competition for available homes has cooled faster than normal as buyers continue to struggle with affordability challenges thanks to high home prices and still-elevated mortgage rates.
That said, if mortgage rates continue their general downward trend, competition could heat up as temperatures begin to cool in the fall.
If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home. But although rate lock among homeowners is easing, they probably won’t be as motivated to jump back into the market and sell. With housing inventory still scarce, this improved affordability picture could reignite competition and sales as we head into the fall, or at least delay the usual post-summer cooldown. Skylar Olsen – Zillow Chief Economist
SELLERS LOSE THEIR ADVANTAGE AS MARKETS GO NEUTRAL
In July, the Zillow market heat index shifted into neutral for the first time since December 2023. The last time we had a neutral July was in 2019.
This is just the news buyers have been waiting to hear. And in this week’s BAMx in a Box, we’ve included a social template to share this information with consumers in your market.
Former seller’s markets Denver, Pittsburgh, Indianapolis, and Louisville moved into neutral territory, while Orlando joined other Florida markets (Miami, Tampa, and Jacksonville) in becoming buyer-friendly.
Compared to a year ago, homes took almost a week longer to go under contract—though still five days faster than pre-pandemic averages.
With inventory up almost 25% compared to a year ago, July marks the eighth consecutive month of year-over-year growth in housing supply. The shortfall is down to 31.5%, marking the smallest deficit since at least 2018 (when Zillow started collecting this data).
More than 26% of homes on Zillow received a price cut in July—the largest share of any July since at least 2018.
FUTURE PREDICTIONS
By the end of July, Zillow economists predict lower mortgage rates will reduce the monthly gap in housing costs between buying and renting to under $200—down from a difference of $247 in April. Lower rates could entice buyers currently on the edge of affordability, especially in higher-cost areas.
Considering 80% of recent sellers were motivated by major life events, we’re less likely to see a significant increase in sellers listing their homes in reaction to lower rates.
Home value appreciation in July slowed to a rate of 2.8% year over year but could speed up if buyer demand outpaces inventory growth, as Zillow economists expect.
Key Details:
- A Zillow news release shows home sellers have lost the upper hand, particularly in markets with the biggest growth in inventory, leading to a more balanced housing market in July.
- Major metros in Florida, Texas, Tennessee and Louisiana are now buyer’s markets, while several other markets have gone neutral as sellers lose their advantage.
Posted by Sarah Lentz | Aug 16, 2024 | Housing Market
@ChuckBarberini – #ChuckBarberiniRealEstate – @ChuckBarberiniRealEstate