Home buyers continue to wait on the sidelines until mortgage rates decrease. As a result, listings are accumulating in some areas, resulting in price cuts, the latest monthly report from Zillow shows.
“A growing segment of homes that aren’t competitively priced or well-marketed are lingering on the market,” says Skylar Olsen, chief economist of Zillow, in a statement. “Sellers are increasingly cutting prices to entice buyers struggling with affordability.”
According to the firm’s data, one in four sellers saw a price cut in June.
”For years, the housing market has been defined by fast sales and few options,” Olsen adds. “Now it’s starting to look more like it did before the pandemic in terms of competition, if not costs. As the wait for mortgage rate relief drags on, slower price growth and even dips in some areas will help buyers catch up on saving for a down payment.”
The total number of homes on the market increased 4% in June compared with May and were up nearly 23% compared with June 2023.
While inventory levels are still about 33% below pre-pandemic averages, that’s the smallest deficit since the fall of 2020, when the pool of available homes was quickly dropping.
Inventory is higher than last year in all of the 50 largest U.S. metropolitan areas except two — New York and Cleveland — and rose month over month in all but five.
Still, with the average rate for a 30-year still hovering around 7%, and home prices soaring, a median-income household can afford mortgage payments when buying a typical home in just 11 of 50 major markets, even when putting 20% down.
With many buyers pushed to the sidelines by costs, Zillow’s Sales Nowcast in June took a 9% step down from May; sales are 35% lower than pre-pandemic norms.
Photo: Phil Hearing