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,” Skylar Olsen, chief economist at Zillow, said in a release. “For many households with record-high equity, waiting out potentially lower rates later in the year may not be worth it.”
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 percent in February compared with last year and rose 20 percent from January. Counts are up annually in each of the 50 largest U.S. metros. They’re 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, according to Zillow.
Total inventory is increasing significantly as well, up 12 percent nationally compared with 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 percent), Tampa (31 percent), Orlando (30 percent) and Miami (29 percent).
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.
What Zillow calls “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 percent nationwide since before the pandemic.
The typical home in the U.S. is worth $349,216, according to the Zillow Home Value Index — up 40.8 percent compared to before the pandemic. Monthly gains were largest in expensive coastal metros: San Jose, Calif. (1.6 percent), San Diego (1.3 percent), Seattle (1.2 percent), San Francisco (0.8 percent) and Washington, D.C. (0.8 percent).