According to the latest Zillow market report, a warmer-than-normal housing market is showing signs of a typical late-summer seasonal cool down, Competition is still strong, with inventory hitting new lows for this time of year, but buyers have a bit more time to find and consider their big purchase.
“The housing market is returning to normal seasonal patterns, and that’s a positive sign for buyers who faced stiff competition this spring,” says Nicole Bachaud, Zillow senior economist. Traditionally, buyers who remain in the market gain a bit more bargaining power heading into the fall. This year, however, sellers are sticking to the sidelines, which means even fewer options and high prices.”
The typical U.S. home value climbed 0.9% from June to July – a steamy pace for this time of year, but a step back from 1.4% growth in the two preceding months. The nation’s typical home value is now $349,679,2, which is 1.4% higher than last July and 46% above pre-pandemic levels in February 2020.
Austin was the lone major market in which home values dipped from June to July, falling 0.5%. The slowest monthly home value growth was in San Antonio (0.2%), Denver (0.2%), Birmingham (0.3%) and Memphis (0.3%).
Easing monthly appreciation is one sign that the normal seasonal pendulum of the market is swinging back in favor of buyers. Homes are also spending longer on the market before going under contract — 12 days in July compared to 11 in June and 10 in April and May. That’s still half as long as in 2019.
Sales of existing homes, constrained by affordability challenges and a lack of homes on the market, are down about 15% year over year.
The number of listings with a price cut ticked up slightly from June as well. The share is right in line with pre-pandemic norms at about 22%.
Homeowners are stubbornly holding on to their houses. New listings of existing homes once again set a new seasonal low-water mark, as roughly 336,000 came to market in July. That’s 26% fewer than last July and 41% below pre-pandemic averages, and is closer to what typically comes online in a frosty January.
New listings have been scarce for a year now, and the most likely cause — high mortgage rates — remains.
Builders are helping bridge the inventory gap, ramping up new home sales now that it’s clear the supply of existing homes isn’t meeting demand. Builders are also getting more creative, turning to smaller homes, more townhouses, and interest-rate buydowns.
Image by Kevin Burroughs from Pixabay.