Homebuyers Gain the Advantage Nationally

Seattle, WA, August 20, 2024-Competition for homes and price appreciation tapered off faster than normal in July as high housing costs continued to stymie shoppers, according to the Zillow market report. But recent drops in mortgage rates should spur more competition as we head into fall. 

"If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home," said Zillow chief economist Skylar Olsen. "But although rate lock among homeowners is easing, they probably won't be as motivated to jump back into the market and sell. With housing inventory still scarce, this improved affordability picture could reignite competition and sales as we head into the fall, or at least delay the usual post-summer cooldown." 

Sellers gave up a marked advantage over buyers in July on the national scale, as the Zillow market heat index moved into neutral territory for the first time since December. This marks the first July the national market has been neutral since 2019; in each of the past two years, the market moved into neutral ground in October. 

Among major markets, Denver, Pittsburgh, Indianapolis and Louisville lost their advantage for sellers and moved into neutral territory, while Orlando became buyer-friendly like the rest of the big Florida metros.

Homes are lingering on the market-even successful listings took almost a week longer to sell in July than last year. While that's still five days faster than the average pace of sales in the years before the pandemic, it's still a sign that buyers were much less eager to commit.

Inventory accumulated further in July, and now stands nearly 25% above last year's levels, marking the eighth straight month the year-over-year inventory gap has widened. Compared to pre-pandemic norms, the inventory shortfall shrank a bit and is now down 31.5%, the smallest deficit since October 2020. 

In an effort to win over cash-strapped buyers, home sellers again cut prices at record levels. More than 26% of homes on Zillow received a price cut in July, the highest share for any July since at least 2018, when the dataset began.