NEW YORK – An infusion of new inventory into the market is welcome news for buyers on the hunt for their next home this spring. It’s also more evidence that the effects of “rate lock” on homeowners are starting to weaken, according to the latest monthly report from Zillow.
“For more than a year, Zillow homeowner surveys have shown an elevated share of homeowners expecting to sell in the next three years. We’re finally beginning to see owners who have been putting off moves return to the market,” said Skylar Olsen, chief economist at Zillow. “For many households with record-high equity, waiting out potentially lower rates later in the year may not be worth it.”
More choices for buyers
Buyers are seeing more choices on the market, which should help spur sales this spring.
New listings of existing homes on Zillow are up 21% in February compared to last year and rose 20% from January. The rising tide of new listings was universal; counts are up annually in each of the 50 largest U.S. metros. They’re coming on strongest in the South, especially Texas and Florida. Substantial new construction in these areas is likely helping to give existing homeowners somewhere to move to, freeing up existing inventory.
Total inventory is increasing significantly as well, up 12% nationally compared to last year. At just over 900,000, there were more homes for sale in February than in any February since 2020. Annual increases are highest in Dallas (up 39%), Tampa (31%), Orlando (30%) and Miami (29%).
Stiff competition for attractive listings
Despite February’s supply increase, competition remains strong for attractive, well-priced listings. Homes that went under contract in February typically did so after 17 days that’s slower than during the rate-fueled frenzy of 2021 and 2022, but far faster than before the pandemic.
Aspirationally priced listings, or those lacking real or virtual curb appeal, are lingering on the market. The average time on Zillow for all homes was 53 days, which is longer than normal for this time of year.
Price cuts are more common than normal – 1 in 5 listings on Zillow are seeing cuts – as sellers bring their expectations closer to where buyers can meet them. Most sellers will have plenty of cushion to absorb a price cut and come out ahead from when they bought their home. Typical home values are up from last year in all but three major metros, and values have risen 41% nationwide since before the pandemic.
Housing costs continue to climb
The typical home in the U.S. is worth $349,216, according to the Zillow Home Value Index, up 40.8% compared to before the pandemic. Monthly gains were largest in expensive coastal metros: San Jose (1.6%), San Diego(1.3%), Seattle(1.2%),S an Francisco(0.8%) and Washington, D.C. (0.8%).
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