This July, the housing markets continue to tilt in favor of sellers, according to Zillow’s most recent Real Estate Report. A nationwide inventory shortage is driving increased demand and home prices, as well as creating an ultra-competitive market for buyers who must outbid each other in order to secure a home.
In July, the typical home value was $253,527, according to Zillow—that’s up 4.5 percent year-over-year; the fastest pace since May 2019. Since June, annual home value growth increased in 42 of America’s 50 largest metros, being led by San Jose, Calif. (up 2.1 percent) and followed by Hartford, (up 0.8 percent).
Homes are typically only sitting on the market for 16 days before they go under contract—two days faster than the previous monthly low that Zillow reported in January 2018.
Since June, home value growth jumped 0.4 percent to 0.48 percent in July—the biggest one-month increase since May 2012.
A lack of supply is driving price increases. According to Zillow, inventory is currently down 28.4 percent YoY for the week ending Aug. 15; that means 409,029 fewer homes on the market than a year ago. The following major metros are currently experiencing the biggest inventory drops: Riverside (-46.5 percent), Baltimore (-43.8 percent) and Hartford (-43.1 percent).
“This spring’s housing soft patch is receding in the rearview mirror as we get a clear picture of robust demand meeting remarkably low supply,” said Zillow economist Jeff Tucker. “Record-low mortgage rates and a record-high number of people in their early 30s are combining to fuel first-time buyer demand. Builders, acting on unprecedented confidence, are racing to meet demand, but supply remains well behind what’s needed. This lack of inventory, along with forbearance terms keeping unemployed homeowners in their homes, stands in stark contrast to the Great Recession, when excess supply and distressed sales brought down home values.”
What does the future hold? According to Zillow, home value growth should slow to 3.6 percent in the next 12 months from the 4.5 percent YoY growth seen in July.
“While the housing market has so far sailed through the headwind of high unemployment, risks remain,” Tucker said. “A slow economic recovery that keeps millions of Americans looking for work could dampen home-buying demand and may even lead to a wave of foreclosures when forbearance expires. This pessimistic possible outcome for 2021 has caused Zillow’s price forecast to shade down a bit.”
For more information, please visit www.zillow.com.