Home Sellers Return, Buyers Hesitate as Market Cools

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SEATTLE, WA — Home sellers are making a comeback in the housing market, but buyers are showing signs of hesitation, according to Zillow’s latest market report. New listings outpaced sales in May, cooling buyer competition and slowing price growth.

New listings rose nearly 13% compared to last year, as homeowners began breaking free from “rate lock” conditions. This term refers to owners holding onto their homes and low-rate mortgages. The number of homes on the market increased by 22% over last year, reducing the inventory deficit seen during the pandemic.

A Zillow survey found that about 80% of recent sellers were motivated by life events such as marriage or having children, rather than financial conditions. Yet, sales in May were 6% lower than last year, causing the housing inventory to grow. Inventory is still 34% below pre-pandemic levels, but this is the smallest gap in over three years.

Regions like the West Coast and coastal South saw the most significant rise in new listings, particularly in San Diego, Seattle, Charlotte, Raleigh, and the San Francisco Bay Area. Florida markets experienced the largest inventory gains due to strong new construction efforts. Only Miami saw fewer listings month-over-month.

As a result, competition among buyers has eased. Home value appreciation slowed in May, with growth in typical home values dropping from 4.4% year-over-year in April to 3.9% in May. Monthly appreciation also slowed from 1.2% in April to 0.8% in May. Despite this, home values remain significantly higher—more than 45% up—since before the pandemic.

Prices have dropped year-over-year in markets like New Orleans, Austin, and San Antonio, while appreciation remains strongest in the Northeast and coastal California. For renters saving up for a down payment, Zillow predicts home values will rise by only 0.4% by the end of 2024 and decrease by 1.4% through May 2025.

Zillow’s market heat index indicates the nation’s housing market is becoming more balanced, favoring buyers slightly less than sellers. Buffalo, Hartford, and San Jose are the top markets for sellers, while New Orleans, Miami, Jacksonville, and Memphis favor buyers.

In May, nearly one-quarter of all homes for sale received a price cut—the highest share in six years for this time of year. This trend suggests buyers may find opportunities to purchase properties for less than the listed price. Both buyers and sellers can benefit from experienced real estate agents who can navigate these changing conditions, ensuring buyers get good deals and sellers price their homes effectively.

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