Persistent buyer demand continues to push the frenzied housing market further into fall and winter months and way past the typical summer peak, according to a new Zillow® report.
In September, 22.4 percent of homes purchased in the U.S. sold over list price, an increase from 20.2 percent in August and above the estimated 15 percent of homes that did so during September 2018 and 2019. According to Zillow, it is highly unusual for the share of homes sold above list price to continue increasing this late in the year. In both 2018 and 2019, the share peaked in July before steadily declining during the fall and winter months.
This strong demand is helping to “keep a lid on inventory” as homes are being sold faster than sellers are listing them, according to Zillow. Inventory continues to fall, down 37.4 percent year-over-year at the end of October, even as new listings returned near last year’s level. This is an indication of how fast the market is moving; homes were typically selling after only 12 days (17 days faster than the same time last year).
“The housing market is taking us all back to Economics 101 and teaching lessons about supply and demand,” said Zillow senior economist Chris Glynn. “A persistent interest in buying and moving is creating an imbalance that is driving prices higher than we typically see at this time of year. In many cases, buyers in this market should be realistic about the chance of bidding wars and leave themselves financial flexibility by looking at homes listed for less than their maximum price point. With tight inventory, low interest rates, and robust demand from households re-evaluating their housing needs, a strong, competitive market with many transactions is likely here to stay into 2021.”
Bidding wars are commonly occurring for homes priced just above and below the typical U.S. home value of $259,906. Homes priced between $192,001 and $264,000 sold above list in 28.2 percent of September sales. In the most-expensive tier—above $487,000—homes sold above list 15.7 percent of the time.