The typical home value eclipsed $350,000 for the first time as healthy demand from buyers continues to collide with reluctant sellers, according to new data from Zillow.
“Homebuyers have persisted this spring despite daunting affordability challenges and record-low inventory,” Jeff Tucker, senior economist at Zillow, said in a release. “Demand typically begins to ease in the summer, and there are signs that competition is waning, but large price declines are unlikely until more homeowners list their homes for sale.”
The typical U.S. home value climbed 1.4 percent from May to June, continuing a four-month hot streak. The new peak of $350,213 is almost 1 percent higher than last June and barely edges out the previous Zillow Home Value Index record set in July 2022.
Affordability remains the key to market strength, as lower-priced metro areas posted the largest monthly gains; Chicago, Buffalo, N.Y., New Orleans and Hartford, Conn., all notched 2.1 percent monthly growth, with Detroit close behind at 2 percent. Those markets all have typical home values lower than the national average.
As in May, home values rose in June in all 50 of the largest metro areas. The slowest monthly growth was in Austin, Texas (0.4 percent), followed by Jacksonville, Fla., Memphis, Tenn., San Antonio, Texas, and Birmingham, Ala., which all saw 0.8 percent increases.
Zillow said the flow of new homes for sale ticked up 2.4 percent month-over-month, but the annual deficit deepened, now standing at 28 percent fewer listings than a year ago.
June is usually one of the best months for fresh inventory, but this year only 376,500 new listings arrived on the market. That’s closer to levels seen in the slower months of February and October than to average new listings in June (505,100), according to Zillow data reaching back to 2018.
A lack of new listings has dogged the housing market for nearly a year, and higher mortgage rates remain the chief suspect. Rates at 6.8 percent this week (the highest since November, up from 5.1 percent a year ago and 3 percent two years ago) make it especially costly for homeowners — most of whom have a mortgage well below today’s rates — to borrow for their next home purchase.
Another explanation could be that homeowners are holding out for higher prices. Home values have steadily increased since January in much of the country but remain below peaks reached last summer in many markets.
“It could be that some homeowners have been waiting until prices set new highs in their market before opting to cash in their chips,” Tucker said.
The total pool of existing homes for sale is lower than any June since at least 2018. It’s down 10 percent from last year and a tremendous 45 percent below June 2019.
Potential buyers could see some slight relief on the horizon, as a few metrics indicate demand and competition are cooling. Sales measured by newly pending listings dipped almost 5 percent from May to June, following seasonal trends seen in 2022 and before the pandemic, when accepted offers crested in May.
Listings also lasted longer in June, 11 days before the typical listing went pending, compared with 10 in May. But that’s still a much faster market than in 2019, when listings went pending in 21 days, Zillow data shows.