SEATTLE, WA — As the spring homebuying season unfolds, there’s a glimmer of hope for buyers who have been navigating an exceptionally tight housing market. A recent report from Zillow reveals a significant uptick in new listings, suggesting that the grip of “rate lock” on homeowners may be loosening, offering more opportunities for buyers eager to find their next home.
For quite some time, the real estate market has been characterized by a dearth of available properties, with homeowners reluctant to sell and forfeit low mortgage rates they locked in during recent years. However, Zillow’s chief economist, Skylar Olsen, notes a shift, “We’re finally beginning to see owners who have been putting off moves return to the market.” This change is driven by homeowners weighing the benefits of capitalizing on their record-high equity against waiting for potentially lower rates.
A Surge in Listings
In February, new listings of existing homes on Zillow saw a 21% increase compared to last year, and a 20% rise from January, signaling a robust return of inventory across the board. The South, particularly Texas and Florida, led this charge, likely fueled by substantial new construction giving homeowners options to move, thereby freeing up existing homes for sale.
The national inventory also saw a 12% annual increase, with over 900,000 homes for sale, marking the highest February figure since 2020. Notably, cities like Dallas, Tampa, Orlando, and Miami experienced the most significant surges.
Competition Remains for Prime Properties
Despite the influx of new listings, competition for well-priced, attractive homes remains fierce. Homes under contract in February typically did so after 17 days on the market—slower than the previous two years but much quicker than pre-pandemic times. Listings that are priced too high or lack appeal are staying longer on the market, with the average time on Zillow now at 53 days.
Sellers are increasingly adjusting their expectations, with one in five listings on Zillow experiencing price cuts. However, with home values up 41% nationwide since before the pandemic, most sellers are still positioned to profit, even after price adjustments.
Rising Housing Costs
The typical U.S. home value stands at $349,216, up 40.8% from pre-pandemic levels, with the most significant monthly gains in high-cost coastal metros. Concurrently, mortgage rates increased in February, pushing the cost of a typical home mortgage 9.4% higher than last year. This adjustment has significantly impacted affordability, requiring buyers to earn about 80% more than in 2020. As a result, many are exploring creative avenues to homeownership, including partnering with friends and family or “house hacking.”
This spring’s burgeoning inventory offers a ray of hope for beleaguered buyers, yet the market’s complexities persist, underscored by rising costs and enduring competition for desirable homes.
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