Ultra-low inventory was a primary driver of price growth during the Spring market, according to a report released Monday by Zillow.
Typical U.S.-home values grew 1.4 percent between April and May of 2023 — slower than the past two springs but faster than both the 2018 and 2019 spring markets, according to the report. The typical-home value now sits at $346,856 — up 0.9% from last May and up 3.4% from January.
The report attributes this price growth to the inventory-strapped environment brought on by most homeowners being reluctant to list their current homes and lose their lower mortgage rates, forcing them to contend with mortgage rates north of 6 percent. However, the few homeowners that do list their properties are being rewarded with competition and higher prices for their homes.
Jeff Tucker
“Many homeowners are still opting not to sell and give up historically low mortgage rates. But those who do have been rewarded with bidding wars as buyers compete for limited options,” Zillow senior economist Jeff Tucker said in a statement. “Spring is traditionally the hottest time of year in the housing market, and 2023 has been no exception. Time will tell if seasonal price slowdowns arrive on time this year, later in summer.”
The housing market has been plagued by a shortage of new listings for nearly a year now, with the flow down 23 percent year over year. And 3.1 percent fewer homes were for sale on Zillow this May than there were at the same time last year — the former low-water mark for the portal — with a whopping 46 percent fewer listings than there were in May 2019.
Despite the challenging conditions, buyers are staying motivated. Newly pending listings climbed 9.5 percent between April and May — shrinking the year-over-year decline to 18 percent. The month of May marked the peak of pending sales in the years 2o18, 2019 and 2022 — the weeks ahead will determine whether that pattern repeats itself.
With the average monthly payment 22 percent higher than it was last year, affordability has emerged as the chief driver of market activity. The largest monthly home-value gains were seen in affordable Midwestern markets, such as Columbus, Ohio, which led the way with a 2.2 percent monthly gain in prices. It was followed closely by Cincinnati, Detroit, Richmond and Milwaukee.
