Home shoppers are fewer and farther between than they’ve been for much of the pandemic. Today’s buyers are facing strong affordability headwinds, but those who can, or must, still buy, are starting to benefit from a more balanced market compared to the pandemic-fueled rush on real estate in 2021. They have more options to tour, more time to find the right house, and are less likely to face a bidding war.
Despite this initial move toward rebalancing, the market is still less buyer-friendly than the pre-pandemic norm in most of the country. The monthly mortgage payment on a typical U.S. home grew another 4.5% in June, and is now 62.3% higher than it was a year ago and 75.7% higher than in June 2019.
Price growth cooldown continues
Affordability obstacles are the likely leading cause for decelerating home value growth. Annual home value appreciation cooled for the third consecutive month in June, stepping down to 19.8% from a record high of 20.9% in April. But it still towers over the 4.6% year-over-year growth recorded in June 2019, before the pandemic. The typical U.S. home value now stands at $354,165, according to the Zillow Home Value Index.
Affordability obstacles are the likely leading cause for decelerating home value growth. Annual home value appreciation cooled for the third consecutive month in June, stepping down to 19.8% from a record high of 20.9% in April. But it still towers over the 4.6% year-over-year growth recorded in June 2019, before the pandemic. The typical U.S. home value now stands at $354,165, according to the Zillow Home Value Index.
Monthly price growth has slowed sharply, down from 1.6% in April to 1.2% in June (smoothed, seasonally-adjusted). Even lower raw monthly price growth of 0.8% suggests further deceleration in the near future.
Home values actually declined slightly from May to June in San Jose, Seattle, San Francisco and San Diego — all among the five most expensive major metro areas — as well as in Austin, where home values have grown the most throughout the pandemic. Annual appreciation is still robust in these metros — from 15.4% in San Francisco to 25.2% in Austin. But a sharp rise in inventory and high rates of listing price cuts all point to a marked cooldown in these top-flight markets for at least the next few months.
Picky buyers are leaving more inventory on the shelf
Inventory has risen steadily this year, bringing a year-over-year deficit of 30.4% in January down to 9.1% in June. But the total pandemic hole is far from being filled — inventory is still down 46% since June 2019.
Extremely expensive metros and those with the largest run-up in prices over the course of the pandemic — San Francisco, Austin, Phoenix and Seattle — have inventory levels closest to where they were in 2019. This is another indication that competition in these areas is easing up more quickly than elsewhere in the U.S.
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