Zillow Group Inc.

08/15/2024 | Press release | Distributed by Public on 08/15/2024 06:07

Sellers lose their advantage, but lower rates may revive housing market competition

Sellers lose their advantage, but lower rates may revive housing market competition

Aug 15, 2024

Zillow

Thursday, August 15, 2024 (8:02am)

Zillow logo (PRNewsfoto/Zillow Group)

Home shoppers held up by high costs could restart their search in the shoulder season

  • Zillow's market heat index shows the market moved into neutral, more balanced territory in July - the first time this year that it's been anything other than a sellers' market.
  • Competition for homes eased - homes that sold went pending in 18 days, six more days than last year.
  • An early August drop in mortgage rates should bring in more new buyers than sellers, reviving competition.

SEATTLE, Aug. 15, 2024 /PRNewswire/ -- Competition for homes and price appreciation tapered off faster than normal in July as high housing costs continued to stymie shoppers, according to the Zillow® market report.1 But recent drops in mortgage rates should spur more competition as we head into fall.

"If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home," said Zillow Chief Economist Skylar Olsen. "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."

Sellers lose the upper hand
Sellers gave up a marked advantage over buyers in July on the national scale, as the Zillow market heat index2 moved into neutral territory for the first time since December. This marks the first July the national market has been neutral since 2019; in each of the past two years, the market moved into neutral ground in October.

Among major markets, Denver, Pittsburgh, Indianapolisand Louisvillelost their advantage for sellers and moved into neutral territory, while Orlandobecame buyer-friendly like the rest of the big Floridametros.

Homes are lingering on the market - even successful listings took almost a week longer to sell in July than last year. While that's still five days faster than the average pace of sales in the years before the pandemic, it's still a sign that buyers were much less eager to commit.

Inventory accumulated further in July, and now stands nearly 25% above last year's levels, marking the eighth straight month the year-over-year inventory gap has widened. Compared to pre-pandemic norms, the inventory shortfall shrank a bit and is now down 31.5%, the smallest deficit since October 2020.

In an effort to win over cash-strapped buyers, home sellers again cut prices at record levels. More than 26% of homes on Zillow received a price cut in July, the highest share for any July since at least 2018, when the dataset began.

What happens next?

This cooling competition and pricing slowdown could dissipate in August if lower mortgage rates hold.

By the end of July, lower rates brought the monthly price premium to buy a home, rather than rent a similar property, below $200.3 That has shrunk from a $247difference as recently as April. Now lower rates in August are closing the gap even further.

Of course, the cost disparity between renting and buying differs in every metro and even by neighborhood. But for those shoppers on the edge of affordability - and who have enough cash on hand for a down payment - the significant drop in rates may offer enough relief to entice a move. The effect of a rate cut on mortgage payments is more significant in expensive areas.

Lower rates aren't likely to encourage a comparable wave of current homeowners to sell, though. Zillow surveys show 80% of recent sellers were influenced by major life events, such as a change in their household size or working situation. New listings typically surge in spring and then taper off as homeowners aim to sell, buy another house, and be moved in before school and the fall holidays begin.

Home value appreciation slowed to a refreshingly reasonable 2.8% year over year in July, but that could tick back up if the surge in demand outweighs an increase in supply, as expected.

Metropolitan
Area*

July Zillow
Home
Value
Index
(ZHVI)
(Raw)

ZHVI
Change,
Month
over
Month
(MoM)

ZHVI
Change
Since
Before
the
Pandemic

Market
Favors**

Share
of
Listings
With a
Price
Cut

Inventory
Change
Since
Before
the
Pandemic

Typical
Mortgage
Payment***

United States

$362,156

0.3 %

46.6 %

Neutral

26.3 %

-31.5 %

$1,900

New York, NY

$675,044

0.9 %

34.1 %

Strong
seller

14.4 %

-52.6 %

$3,522

Los Angeles, CA

$967,944

0.3 %

43.8 %

Seller

20.7 %

-32.6 %

$5,029

Chicago, IL

$328,239

0.7 %

38.1 %

Seller

25.4 %

-51.7 %

$1,718

Dallas, TX

$378,091

-0.1 %

46.9 %

Neutral

37.5 %

-11.3 %

$1,985

Houston, TX

$310,998

0.1 %

39.2 %

Neutral

28.8 %

-17.3 %

$1,632

Washington, DC

$568,111

0.0 %

31.1 %

Strong
seller

23.2 %

-44.6 %

$2,975

Philadelphia, PA

$365,874

0.4 %

45.5 %

Seller

22.9 %

-49.8 %

$1,918

Miami, FL

$492,157

0.2 %

62.4 %

Buyer

23.2 %

-13.9 %

$2,580

Atlanta, GA

$387,104

0.1 %

57.0 %

Neutral

31.9 %

-16.8 %

$2,031

Boston, MA

$706,598

0.5 %

44.4 %

Strong
seller

19.6 %

-42.1 %

$3,697

Phoenix, AZ

$457,842

-0.3 %

52.4 %

Neutral

34.3 %

-23.1 %

$2,406

San Francisco, CA

$1,178,102

-0.2 %

25.3 %

Strong
seller

19.7 %

-5.6 %

$6,157

Riverside, CA

$588,097

0.3 %

53.3 %

Seller

23.5 %

-33.8 %

$3,075

Detroit, MI

$255,620

0.4 %

42.3 %

Seller

24.6 %

-40.1 %

$1,342

Seattle, WA

$747,883

-0.1 %

45.0 %

Seller

28.7 %

-26.2 %

$3,913

Minneapolis, MN

$377,229

0.2 %

28.3 %

Strong
seller

26.5 %

-37.4 %

$1,983

San Diego, CA

$953,488

-0.2 %

56.8 %

Seller

27.9 %

-39.2 %

$4,994

Tampa, FL

$380,626

-0.1 %

61.6 %

Buyer

32.7 %

29.0 %

$2,003

Denver, CO

$590,525

-0.1 %

35.9 %

Neutral

38.2 %

-3.8 %

$3,092

Baltimore, MD

$387,557

0.1 %

31.9 %

Seller

25.7 %

-50.7 %

$2,037

St. Louis, MO

$255,516

0.4 %

42.2 %

Strong
seller

23.0 %

-48.6 %

$1,337

Orlando, FL

$399,690

0.2 %

55.0 %

Buyer

29.1 %

25.3 %

$2,097

Charlotte, NC

$385,392

0.1 %

59.8 %

Neutral

28.0 %

-6.8 %

$2,024

San Antonio, TX

$287,892

-0.1 %

34.7 %

Neutral

34.5 %

10.8 %

$1,514

Portland, OR

$553,363

0.1 %

32.8 %

Seller

30.5 %

-24.9 %

$2,899

Sacramento, CA

$587,238

0.2 %

35.1 %

Seller

28.5 %

-34.7 %

$3,077

Pittsburgh, PA

$215,714

-0.2 %

34.9 %

Neutral

28.7 %

-43.9 %

$1,136

Cincinnati, OH

$289,362

0.5 %

49.7 %

Seller

29.1 %

-42.1 %

$1,514

Austin, TX

$459,270

-0.4 %

41.7 %

Buyer

32.6 %

33.9 %

$2,415

Las Vegas, NV

$434,569

0.6 %

46.1 %

Seller

27.2 %

-32.6 %

$2,269

Kansas City, MO

$307,836

0.3 %

47.3 %

Seller

29.6 %

-45.7 %

$1,612

Columbus, OH

$316,724

0.4 %

51.4 %

Seller

31.7 %

-31.3 %

$1,660

Indianapolis, IN

$283,298

0.3 %

52.2 %

Neutral

33.1 %

-24.3 %

$1,486

Cleveland, OH

$234,178

0.8 %

49.8 %

Strong
seller

23.5 %

-58.6 %

$1,224

San Jose, CA

$1,613,123

-0.4 %

42.0 %

Strong
seller

17.3 %

-24.5 %

$8,317

Nashville, TN

$444,811

0.1 %

49.3 %

Neutral

36.8 %

-15.1 %

$2,335

Virginia Beach, VA

$353,704

0.3 %

42.4 %

Seller

24.4 %

-51.2 %

$1,851

Providence, RI

$492,405

1.0 %

55.1 %

Strong
seller

19.7 %

-61.0 %

$2,568

Jacksonville, FL

$360,340

0.0 %

52.5 %

Buyer

33.2 %

4.6 %

$1,896

Milwaukee, WI

$351,105

0.5 %

44.9 %

Seller

16.4 %

-32.6 %

$1,841

Oklahoma City, OK

$236,885

0.2 %

43.8 %

Neutral

31.2 %

-17.7 %

$1,243

Raleigh, NC

$446,704

0.0 %

53.8 %

Seller

36.0 %

-21.4 %

$2,345

Memphis, TN

$241,340

-0.1 %

46.9 %

Buyer

29.4 %

1.6 %

$1,269

Richmond, VA

$373,333

0.3 %

48.5 %

Strong
seller

25.4 %

-45.9 %

$1,956

Louisville, KY

$261,246

0.5 %

38.7 %

Neutral

28.9 %

-34.0 %

$1,367

New Orleans, LA

$245,134

0.4 %

5.3 %

Buyer

26.4 %

38.3 %

$1,293

Salt Lake City, UT

$545,852

-0.1 %

46.4 %

Seller

33.3 %

-20.1 %

$2,864

Hartford, CT

$368,351

0.9 %

59.7 %

Strong
seller

16.5 %

-67.2 %

$1,927

Buffalo, NY

$267,020

0.9 %

55.2 %

Strong
seller

19.7 %

-43.7 %

$1,400

Birmingham, AL

$254,613

0.1 %

38.2 %

Neutral

26.0 %

-27.5 %

$1,339


*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 July (6.85%), using a 20% down payment.

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 The Zillow market heat index aims to capture the balance of for-sale demand and supply in a given market, or in this case, on a national scale.

3 Pitting the monthly mortgage payment for a typical home, priced at the Zillow Home Value Index, using a 20% down payment, and weekly mortgage rate averages against the Zillow Observed Rent Index.

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.

SOURCE Zillow

For further information: Mark Stayton, Zillow, [email protected]