Expect lower mortgage rates to energize home buyers and sellers
Rhea-AI Summary
Zillow's latest market report reveals a shifting housing landscape in February 2025, with 1.04 million homes available - the highest February inventory since 2020 and 15% above last year. Despite new listings dropping 5% year-over-year, the market shows signs of increased buyer advantage.
Home value growth has slowed to a 2.1% year-over-year increase, marking the lowest February growth since 2012. Properties now spend approximately 23 days on the market before pending sale, six days longer than last year. Declining mortgage rates, reaching December-level lows, could stimulate both buyer and seller activity.
The market currently shows no clear advantage for either buyers or sellers nationally, a situation last seen in February 2019. Pending listings have decreased by 8% compared to last year but remain 10% above pre-pandemic levels. The rental market is experiencing a notable shift, with multifamily rent growth outpacing single-family homes for the first time since June 2024.
Positive
- Highest February inventory in 5 years with 1.04 million homes available
- Declining mortgage rates reaching December-level lows
- Pending sales remain 10% above pre-pandemic levels
- Sellers expected to receive premiums through July
Negative
- Home value growth slowed to 2.1% YoY, lowest since 2012
- New listings declined 5% year-over-year
- Pending listings decreased 8% compared to previous year
- Extended time on market to 23 days, indicating slower sales
Insights
Zillow's latest market report reveals both opportunities and challenges for the company's business model. The increasing inventory of available homes (up
The decline in mortgage rates represents a significant catalyst that could reinvigorate both buying and selling activity. As the company's Chief Economist notes, rate dips typically energize market participants, which directly benefits Zillow's marketplace model. The longer listing times (now 23 days versus 17 last year) may actually benefit Zillow by extending the premium advertising window for each property.
The slowing home value appreciation (down to
Importantly, the report indicates housing market activity still stands about
This market report reveals a housing ecosystem in transition toward pre-pandemic equilibrium. With listings taking 23 days to go pending – just 4 days faster than pre-pandemic norms – we're witnessing the market's first substantial normalization since 2020. This cooling competition environment has slowed annual home value growth to
The inventory milestone of 1.04 million available homes marks a significant supply recovery, yet remains balanced by the
The report's most actionable insight is the correlation between mortgage rate decreases and market activity. The approximately 25 basis point reduction in February, with further drops in March, provides meaningful payment relief exactly when the spring selling season typically accelerates. For Zillow, this timing aligns perfectly with their peak traffic period.
The noted shift in rental dynamics, with multifamily outpacing single-family growth for the first time since mid-2024, signals a potential rotation in housing demand driven by construction patterns and affordability constraints. This represents an important indicator for Zillow's rental marketplace strategy, as consumer preferences appear to be evolving in response to economic conditions rather than pandemic-influenced lifestyle choices.
Well over 1 million homes are available to buyers, the most for this season in five years
- Annual home value growth has slowed to an 18-month low of
2.1% , helping buyers make up ground on affordability. - Listings are going pending in 23 days, more slowly than in recent years.
- A total of 1.04 million homes were on the market in February, the most for this time of year since 2020.
Mortgage rates fell by about a quarter of a point over the course of February and have staggered further downward in March, now reaching lows not seen since December. Mortgage rates have enough of an impact on monthly payments to provide significant cost savings for prospective buyers and could help entice some fence-sitting homeowners to list their properties.
Aside from costs, buyers are gaining a leg up in a few areas of the market. For one, they'll see more options when they start shopping — 1.04 million homes were on the market last month, more than in any February since 2020, and
"Affordability is still a massive challenge for those who have been waiting to buy a home, but the lower rates we've seen so far in March are taking the edge off," said Skylar Olsen, Zillow chief economist. "Rate dips tend to energize buyers and sellers both; if they continue or hold, we should see more activity. Economic uncertainty is a counterbalance, one that will be felt in some areas of the country more than others. People tend to shelter in place when the future of their job or industry is uncertain."
With more homes for sale, competition among buyers is slower, too. Listings are spending about 23 days on the market before a sale is pending. That's six more days than last year and just four fewer than at this time pre-pandemic — closer to "normal" than at any time since 2020.
Slowing competition means slower growth in home values. Typical home values are up
Newly pending listings fell by nearly
Neither buyers nor sellers have a clear advantage in negotiations at the national level, according to Zillow's market heat index — a throwback for this time of year. The last year that happened in February was 2019.
Meanwhile, Zillow's latest rental market report reveals a major shift in market dynamics. With an increase in single-family home construction, a slowdown in new apartment developments, and an affordability pinch, multifamily rent growth is surpassing that of single-family homes for the first time since June 2024.
Least Competitive Markets — Best for Buyers | Most Competitive Markets — Best for Sellers |
Miami | Buffalo |
New Orleans | |
Tampa | |
Memphis |
Metro Area* | Zillow Home | ZHVI | Inventory | New | Market | Newly | Change in |
2.1 % | 15.4 % | -4.7 % | neutral | -7.9 % | -4 | ||
5.6 % | -9.2 % | -13.3 % | strong seller | -12.4 % | -30 | ||
3.9 % | 35.5 % | 16.8 % | seller | 1.1 % | -3 | ||
5.1 % | -2.1 % | -17.2 % | seller | -8.6 % | -12 | ||
-1.4 % | 26.5 % | -3.6 % | seller | -8.3 % | 4 | ||
-0.2 % | 24.7 % | 2.3 % | neutral | -6.9 % | 13 | ||
4.0 % | 20.4 % | 2.4 % | strong seller | -8.1 % | -16 | ||
4.1 % | 2.2 % | -9.7 % | seller | -10.7 % | -24 | ||
-0.2 % | 23.7 % | -9.3 % | buyer | -15.2 % | 16 | ||
-0.7 % | 31.4 % | 0.1 % | neutral | -16.8 % | 22 | ||
4.2 % | -1.9 % | -13.7 % | strong seller | -9.0 % | -5 | ||
-1.6 % | 35.3 % | 12.5 % | neutral | 2.7 % | 0 | ||
2.4 % | 32.5 % | 21.2 % | strong seller | 11.5 % | -1 | ||
1.8 % | 33.5 % | 13.1 % | seller | -2.9 % | 2 | ||
4.3 % | 1.8 % | -11.4 % | seller | -10.8 % | -7 | ||
4.3 % | 22.8 % | -1.5 % | strong seller | 3.1 % | -3 | ||
2.4 % | 6.1 % | -8.2 % | strong seller | -5.4 % | -2 | ||
2.3 % | 39.0 % | 13.6 % | seller | -1.8 % | -4 | ||
-3.6 % | 19.8 % | -1.1 % | buyer | -6.1 % | 7 | ||
0.0 % | 40.9 % | 10.5 % | seller | 3.5 % | 9 | ||
3.1 % | 9.4 % | -8.8 % | seller | -10.9 % | -26 | ||
3.6 % | 10.9 % | -2.4 % | seller | -3.3 % | -14 | ||
-1.4 % | 30.5 % | 0.8 % | neutral | -13.3 % | 15 | ||
0.9 % | 28.7 % | 5.0 % | neutral | -13.8 % | 8 | ||
-2.0 % | 11.3 % | -2.2 % | neutral | -14.6 % | 22 | ||
1.3 % | 16.0 % | -4.6 % | seller | -6.3 % | -1 | ||
1.3 % | 34.6 % | 19.7 % | seller | 1.3 % | 1 | ||
2.4 % | 6.1 % | -17.1 % | neutral | -10.3 % | -33 | ||
4.6 % | 8.4 % | -6.7 % | seller | -6.8 % | -9 | ||
-3.8 % | 8.0 % | -7.6 % | neutral | -23.2 % | 53 | ||
4.2 % | 40.5 % | 12.8 % | neutral | 2.9 % | 4 | ||
3.1 % | 13.0 % | -9.7 % | seller | -4.3 % | -9 | ||
3.1 % | 20.5 % | -4.3 % | seller | -4.0 % | 1 | ||
3.2 % | 10.5 % | -3.4 % | neutral | -0.3 % | -7 | ||
6.2 % | 1.1 % | -10.2 % | seller | -10.6 % | -40 | ||
7.6 % | 36.2 % | 33.3 % | strong seller | 12.0 % | -4 | ||
1.3 % | 24.2 % | 2.1 % | neutral | -4.1 % | 11 | ||
3.9 % | 13.2 % | -12.6 % | seller | -10.0 % | -42 | ||
6.5 % | 8.5 % | -3.2 % | strong seller | -9.8 % | -23 | ||
-1.5 % | 26.3 % | -0.3 % | buyer | -11.6 % | 10 | ||
4.7 % | 5.3 % | -0.6 % | strong seller | -13.8 % | N/A | ||
2.0 % | 7.2 % | -15.9 % | neutral | -15.9 % | -38 | ||
0.0 % | 21.5 % | 0.3 % | seller | -18.8 % | 8 | ||
0.7 % | 2.6 % | -14.8 % | neutral | 23.4 % | -12 | ||
3.6 % | 8.8 % | -12.6 % | strong seller | -3.9 % | -4 | ||
5.2 % | 8.3 % | -12.6 % | neutral | -19.9 % | -10 | ||
-1.7 % | 11.4 % | -7.2 % | buyer | 2.6 % | 20 | ||
2.7 % | 16.2 % | -4.7 % | seller | -13.1 % | 9 | ||
5.6 % | -1.1 % | -14.8 % | strong seller | -8.5 % | -26 | ||
5.0 % | -8.0 % | -22.6 % | strong seller | -8.2 % | -16 | ||
0.6 % | 10.5 % | -0.5 % | neutral | -1.5 % | 2 |
*Table ordered by market size
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
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). © 2025 MFTB Holdco, Inc., a Zillow affiliate.
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SOURCE Zillow
FAQ
How many homes were available for sale in February 2025 according to Zillow (ZG)?
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