Activity in the housing market is warming up with the weather, but economic uncertainty is causing some buyers to hesitate. According to the latest market report from Zillow, home sales declined slightly from last year, while inventory reached levels not seen in nearly five years. Competition varies sharply by region.
“Economic anxieties disrupted the start of the home shopping season,” Zillow Senior Economist Kara Ng said in a release. “In April, many households didn’t know what was next for their jobs, investment portfolios or budgets. This kept some buyers on the sidelines, waiting for clearer economic signals before making major purchases like a home. As uncertainty has since eased, improved availability and affordability in homes could lead to a rebound in the coming months.”
Buyer and seller activity is picking up heading into the traditional peak for home shopping, according to Zillow. Newly pending sales rose 3.4 percent from March to April; however, they're still 2.5 percent below where they were this time last year.
Lower mortgage rates have brought some relief, reducing monthly payments by about 1.3 percent compared to last April. But economic uncertainty weighs more heavily on buyers — especially first-time buyers — than it does on sellers, who are generally more financially stable and have home equity to put toward their next purchase.
Sellers, meanwhile, are more active. New listings climbed 9.8 percent month-over-month and 7.6 percent compared to last year, outpacing sales nationwide. In fact, 44 of the 50 largest metros saw an annual increase in new listings.
To close the gap with cautious buyers, nearly 25 percent of Zillow listings underwent a price cut in April — the highest share for this time of year since at least 2018.
Buyers have a wealth of options to choose from, according to Zillow. Inventory nationwide is up nearly 20 percent year-over-year, reaching levels not seen since August 2020. In 16 major metros, inventory has surpassed pre-pandemic levels — particularly in the South and some Western areas.
Homes are going under contract in a median of 16 days, three days slower than last year and six days slower than in 2023. That's giving buyers more time to find the right fit, often with safeguards such as inspection and financing contingencies, according to Zillow.
Zillow's market heat index indicates sellers still have a slight upper hand in negotiations nationwide. Competition has finally cooled back down to 2018 and 2019 averages, after being heavily tilted in sellers’ favor in more recent springs.
Buyers hold the reins in the South — Tampa, Fla., Jacksonville, Fla., New Orleans and Miami — where builders have contributed to an inventory recovery, and where insurance costs have risen dramatically, according to Zillow. Sellers have the strongest bargaining positions in Buffalo, as well as Hartford, Conn., and Boston.