Home shoppers are finding more options, more time to make decisions and even some price cuts, according to Zillow’s most recent market report. That’s because affordability challenges are thinning competition, giving leverage to those who remain.
“Those who can weather this storm of rising costs are having an otherwise less stressful buying experience compared to the pandemic-fueled rush on real estate in 2021. They have more options to tour, more time to find the right house, and are less likely to face a bidding war,” Zillow Senior Economist Jeff Tucker said in a release. “But despite this initial move toward rebalancing, the market is still less buyer-friendly than the pre-pandemic norm in most of the country. Home seekers who are priced out today are eagerly anticipating drops in prices or mortgage rates so they can step back into the ring.”
Annual home value appreciation eased for the third consecutive month in June, dipping to 19.8 percent from a record high of 20.9 percent in April. But it’s still way up from the 4.6 percent year-over-year growth recorded in June 2019. The typical home value now stands at $354,165 and comes with a monthly mortgage payment that is more than 75 percent higher than in June 2019.
Home values declined slightly from May to June in San Jose, Calif., Seattle, San Francisco, San Diego and Austin, Texas, where home values have grown the most throughout the pandemic.
Inventory has risen steadily over the past few months, bringing an annual deficit of 30.4 percent in January down to 9.1 percent in June. But inventory is still down 46 percent since June 2019, according to Zillow.
Expensive metros and those with the largest run-up in prices over the course of the pandemic — San Francisco, Austin, Texas, Phoenix and Seattle — have inventory levels closest to where they were in 2019. This indicates competition in those areas is easing more quickly than the national average.
Median time on the market has ticked up, meaning buyers have slightly more time to shop, compare and evaluate options. Listings that go pending typically do so in seven days.
The share of homes with a price cut is rising as well. Salt Lake City (24.1 percent), Sacramento (21.7 percent) and Phoenix (20.4 percent) are seeing the highest shares of price cuts.
A lack of affordable options is driving the slowdown, according to Zillow. Of the 15 major metros that saw the largest month-over-month drops in listings that went under contract, 12 are among the nation’s 15 most expensive places to buy, according to Zillow. The fastest drops in newly pending sales from May to June took place in San Jose (-24.3 percent), Seattle (-23.9 percent) and Salt Lake City (-20.8 percent).
Of the 15 major metros with the smallest monthly pullback in sales, 10 are among the 15 least-expensive large cities.