Homesellers Are Cutting Prices as Housing Inventory Expands
Seattle, WA, July 19, 2024-Home listings are piling up as buyers step back from the peak of home shopping season faster than normal, according to the latest monthly report from Zillow.
"A growing segment of homes that aren't competitively priced or well marketed are lingering on the market. Sellers are increasingly cutting prices to entice buyers struggling with affordability," said Skylar Olsen, chief economist of Zillow. "For years, the housing market has been defined by fast sales and few options. Now it's starting to look more like it did before the pandemic in terms of competition, if not costs. As the wait for mortgage rate relief drags on, slower price growth and even dips in some areas will help buyers catch up on saving for a down payment."
The total number of homes on the market has risen throughout the year, ticking up 4% from May to June to stand nearly 23% above last year's low level. While inventory levels are still about 33% below pre-pandemic averages, that's the smallest deficit since the fall of 2020, when the pool of available homes was quickly dropping.
Inventory is higher than last year in all of the 50 largest U.S. metropolitan areas except two-New York and Cleveland-and rose month over month in all but five.
Attractive listings are selling relatively quickly. But buyers still in the market are enjoying a few more days to weigh their choices than they had last summer. Homes sold in June were typically on the market for 15 days before the seller accepted an offer. That's five days shorter than pre-pandemic norms, the smallest difference since June 2020.
While mortgage rates have eased from May peaks, buyers are still contending with costs that have risen far faster than wages. A median-income household can afford mortgage payments when buying a typical home in just 11 of 50 major markets, even when putting 20% down.
With many buyers pushed to the sidelines by costs, Zillow's Sales Nowcast in June took a 9% step down from May; sales are 35% lower than pre-pandemic norms.
Home value growth has slowed as inventory rises. Annual appreciation is a reasonable 3.2% nationally, down from a 2024 peak of 4.6% in March. Monthly growth has decelerated to 0.6%-the slowest June appreciation since 2011.
Slower home value growth in the months ahead could give struggling buyers a chance to make up ground. Zillow forecasts home values to rise just 1% nationally through June 2025.