Rate drops, more inventory add intrigue to housing 'offseason'
Rhea-AI Summary
Zillow's latest market report reveals a window of opportunity for home buyers due to lower mortgage rates and rising inventory. The monthly payment on a typical home has fallen by more than $100 nationwide since May, improving affordability. Key findings include:
- The Zillow market heat index shifted from favoring sellers to neutral in July.
- Homes are taking longer to sell, but still faster than pre-pandemic times.
- Nearly 1.18 million homes are on the market, the highest since September 2020.
- The share of listings with price cuts decreased in August to just under 26%.
- One-third of homes sold in July went for more than asking price.
These trends suggest that competition among buyers could extend into the fall, contrary to typical seasonal patterns. The report highlights opportunities for both buyers and sellers in this evolving market landscape.
Positive
- Monthly mortgage payments have decreased by over $100 nationwide since May, improving affordability
- Inventory has increased to nearly 1.18 million homes, the highest since September 2020
- One-third of homes sold in July went for more than asking price
- Homes are still selling relatively quickly, in 20 days on average
Negative
- The Zillow market heat index shifted from favoring sellers to neutral in July
- Homes are taking longer to sell compared to recent history
- The share of listings with price cuts remains high at just under 26%
- Inventory is still 30.8% lower than before the pandemic
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Competition among buyers is likely to extend into the fall thanks to improved affordability
- Monthly mortgage payments have fallen by more than
$100 - Price cuts ticked down in August but are still common, landing on more than 1 in 4 listings.
- Competition is stiff for attractive listings, with more than one-third of homes selling for over asking price.
"Late summer may be an opportunity for buyers who have been waiting in the wings for a monthly mortgage payment they can qualify for," said Skylar Olsen, Zillow chief economist. "Buyers have more options to choose from for two reasons. For one, it's easier to qualify for more of the homes on the market now that mortgage rates are a bit lower. Beyond that, more inventory is becoming available — enough to improve buyer negotiating power. Attractive properties in hot markets are still selling quickly, but some metros — or neighborhoods within them — have flipped further in favor of buyers."
Mortgage rate declines have made buying a home roughly affordable again at the national level (meaning monthly payments generally take less than one-third of median household income), assuming a buyer puts
Beyond lower costs, a number of metrics are moving in buyers' favor. The Zillow market heat index shifted from being in favor of sellers into neutral territory in July. For the past two years, sellers held their edge nationally until October.
Homes are taking longer to sell than in recent history, but shorter than in pre-pandemic times. Homes that sold in August took 20 days to go pending, two more than in July, but about six days faster than at this time of year before the pandemic. And while inventory growth has slowed, nearly 1.18 million homes are on the market, more than any month since September 2020.
Lower rates could stall or slow a normal autumn cooldown, because right now buyers are more likely to be motivated by lower rates than sellers are.
Some signals are already pointing to an altered trajectory in the housing market. The share of listings on Zillow with a price cut ticked down from July to August, reversing an upward trend of rising every month since March. Just under
Opportunities for buyers
- Lower rates mean improved affordability: Purchasing power is greater, and buying a house may now fit into buyers' monthly budgets.
- Homes are taking longer to sell, giving buyers more time to decide and more leverage in negotiations.
- Inventory continues to slowly recover from a years-long shortfall, giving buyers more options.
Opportunities for sellers
- Well-priced and -marketed homes are still selling relatively quickly, in 20 days, almost a week faster than at this time of year before the pandemic.
- Lower mortgage rates could raise buyer competition in the fall. The share of homes with a price cut dropped in August.
- One-third of homes that sold in July — the most recent data available — went for more than asking price.
- Seventy percent of sellers turn around and buy — the benefits to buyers given above apply to their next home.
Metropolitan | August | Market | Typical | Typical | Median | Share | Inventory |
neutral | -3.4 % | 20 | 25.9 % | -30.8 % | |||
strong seller | -3.0 % | 27 | 13.3 % | -54.4 % | |||
seller | -3.0 % | 18 | 20.9 % | -30.6 % | |||
seller | -3.2 % | 12 | 26.0 % | -50.6 % | |||
neutral | -3.7 % | 31 | 34.8 % | -8.1 % | |||
neutral | -3.6 % | 34 | 29.9 % | -12.6 % | |||
strong seller | -3.4 % | 11 | 23.0 % | -44.4 % | |||
seller | -3.3 % | 11 | 22.9 % | -48.0 % | |||
buyer | -3.5 % | 45 | 22.0 % | -11.6 % | |||
neutral | -3.6 % | 29 | 32.1 % | -14.8 % | |||
strong seller | -3.3 % | 11 | 19.3 % | -44.4 % | |||
neutral | -3.8 % | 30 | 33.3 % | -20.5 % | |||
strong seller | -3.6 % | 16 | 18.9 % | -4.1 % | |||
seller | -3.3 % | 23 | 23.7 % | -32.9 % | |||
seller | -3.5 % | 11 | 25.8 % | -38.1 % | |||
seller | -3.4 % | 14 | 27.5 % | -26.3 % | |||
strong seller | -3.5 % | 21 | 26.9 % | -35.8 % | |||
seller | -3.6 % | 19 | 27.0 % | -36.1 % | |||
buyer | -3.8 % | 37 | 35.6 % | 9.5 % | |||
neutral | -3.5 % | 23 | 35.7 % | -2.6 % | |||
seller | -3.6 % | 9 | 25.5 % | -49.2 % | |||
seller | -3.3 % | 7 | 24.4 % | -47.6 % | |||
buyer | -3.6 % | 32 | 31.2 % | 9.7 % | |||
neutral | -3.6 % | 25 | 27.9 % | -3.7 % | |||
neutral | -3.8 % | 42 | 32.3 % | 12.6 % | |||
seller | -3.5 % | 21 | 29.2 % | -24.4 % | |||
seller | -3.6 % | 17 | 28.8 % | -34.8 % | |||
neutral | -3.7 % | 15 | 29.3 % | -40.6 % | |||
seller | -3.3 % | 7 | 29.8 % | -37.7 % | |||
buyer | -3.9 % | 58 | 30.2 % | 30.5 % | |||
seller | -3.1 % | 21 | 27.6 % | -27.3 % | |||
seller | -3.4 % | 10 | 30.8 % | -44.0 % | |||
seller | -3.4 % | 8 | 31.9 % | -29.7 % | |||
neutral | -3.5 % | 13 | 33.7 % | -20.6 % | |||
strong seller | -3.1 % | 8 | 24.4 % | -56.8 % | |||
strong seller | -2.7 % | 13 | 18.5 % | -26.0 % | |||
neutral | -3.6 % | 27 | 34.5 % | -10.5 % | |||
seller | -3.3 % | 25 | 25.2 % | -47.8 % | |||
strong seller | -2.9 % | 10 | 22.2 % | -61.4 % | |||
buyer | -3.7 % | 49 | 32.5 % | 4.9 % | |||
seller | -3.3 % | 19 | 19.4 % | -29.7 % | |||
neutral | -3.5 % | 21 | 30.6 % | -14.8 % | |||
seller | -3.6 % | 20 | 34.5 % | -19.2 % | |||
buyer | -3.8 % | 34 | 28.5 % | 0.9 % | |||
strong seller | -3.3 % | 10 | 26.1 % | -44.7 % | |||
neutral | -3.3 % | 10 | 29.2 % | -31.3 % | |||
buyer | -4.0 % | 42 | 24.9 % | 42.1 % | |||
seller | -3.6 % | 19 | 34.1 % | -21.0 % | |||
strong seller | -3.1 % | 7 | 18.4 % | -68.0 % | |||
strong seller | -3.2 % | 11 | 20.3 % | -44.1 % | |||
neutral | -3.7 % | 24 | 25.7 % | -26.2 % |
*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 August ( | |
1 | The Zillow® 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. |
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SOURCE Zillow