The long-standing buyer's lament in the U.S. housing market has been the lack of available homes. With an end-of-summer deceleration anticipated, many braced for the continuation of this trend. Yet, in an unexpected twist, Zillow's latest market report shows that the month of August brought a slight surge in new listings, offering buyers a breath of fresh air.
The Surge in New Listings
Despite the new listings being below the pre-pandemic standards, the increase was a beacon of hope for potential buyers. According to the report from Zillow, sellers listed approximately 350,000 homes for sale in the U.S. in August, marking a 4% rise from July. This is noteworthy because the number of new listings was over 20% below the pre-pandemic rates. Remarkably, data from Zillow showed a decline in new listings every August since 2018, making this upswing even more surprising.
This gentle shift has reduced the annual deficit of new listings from -26% YoY in July to a more favorable -13% in August. As Zillow senior economist Jeff Tucker observed, "Those still shopping for homes late in summer were offered a bit of relief, and not all from expected sources. What we didn't expect — especially considering 7-plus-percent mortgage rates — was more new listings.
The Inventory Status
An insight into the broader housing scenario reveals that homeowners who secured ultra-low mortgage rates in 2020 and 2021 have been reluctant to sell. This hesitance has kept new listings at seasonal record lows for a staggering 14 consecutive months, barring the anomaly of April 2020.
Total inventory did see a bump in August, increasing by 2.2% from the previous month. Nonetheless, when compared to the levels of August 2019, the inventory is still lagging by around 42%.
What's Ahead this Fall?
Historically, the fall season has ushered in moderate price growth and a reduced buyer competition, aligning with the patterns evident in Zillow's data. The typical U.S. home value witnessed a modest rise of 0.2% between July and August, contrasting the soaring monthly appreciation rates seen during spring and the onset of summer.
Furthermore, this upward tick has positioned the nation's average home value at a new pinnacle of $351,423 — an increase of 1.3% from last August.
In terms of regional fluctuations, home values increased month over month in 32 of the 50 largest metro areas during August. Leading this list were cities such as Hartford, Buffalo, San Diego, Cleveland, and Providence. Conversely, 12 significant metro areas, including New Orleans, Austin, San Antonio, Denver, and Dallas, experienced a drop in home values from July to August.
The Buyers' Edge
As the summer ebbs away, there are visible signs of change in the buying experience. Listings in August took a median of 13 days to be marked as pending, which is a day more than it took in July. Moreover, with sales activities taking a dip (19% fewer newly pending listings in August year over year), buyers can enjoy a marginally more relaxed pace.
Mortgage Rate Dynamics
The whimsical nature of mortgage rates remains a concern, heavily influenced by fresh economic insights and remarks from the Federal Reserve. Zillow recommends prospective homebuyers use tools like the affordability calculator, ensuring that they align their search with a monthly payment bracket that suits their financial capacity.
In conclusion, while the housing market's inherent challenges persist, the unexpected influx of new listings in August threw a curveball. As the market cools off and transitions into fall, potential homebuyers might find a slightly more accommodating environment. Only time will tell if this trend holds or is merely a seasonal blip.