Home prices in the US rose 1.3% in August, but the increase was tempered by a 4% increase in new listings.
This is the first time in over a year that new listings have increased month-over-month. The increase is a welcome development for homebuyers, facing an uphill battle in recent months. The inventory shortage has made it difficult to find a home that meets their needs, and prices have been steadily rising.
Jeff Tucker, the senior economist at Zillow, remarked on this surprising development, noting that late-summer home shoppers found unexpected relief. He explained, “Competition for houses tends to ease up at this time of year, giving buyers more time to decide and a better chance to negotiate on price.” He went on to say the unexpected increase in new listings, particularly in light of the high mortgage rates exceeding 7%, was unforeseen. While the inventory shortage persists, this represents a positive step forward.
In August, sellers across the United States listed nearly 350,000 homes for sale, marking a 4% increase compared to July. While these numbers still fall more than 20% below pre-pandemic levels, this uptick provided a breath of fresh air to home shoppers at a time when inventory is traditionally dwindling. Historically, Zillow data dating back to 2018 has shown that new listings tend to contract every August. However, this year's slight upward bump helped reduce the annual deficit in new listings from -26% year-over-year in July to -13% in August.
One significant factor contributing to the ongoing inventory shortage has been homeowners who purchased or refinanced their properties at ultra-low mortgage rates in 2020 or 2021. These individuals have been reluctant to sell, resulting in record-low new listings for 14 consecutive months,excep tApril 2020.
Key Highlights Related to New Listings
● New listings surged by 4.0% in August compared to July.
● In contrast, there was a 12.7% drop in new listings this August compared to the previous year,a less severe decline than the 25.6% year-over-year decrease observed in July.
● Total housing inventory increased by 2.2% from July to August.
● However, inventory levels remain approximately 42% below those of August 2019
Heading into the fall, prospective buyers can anticipate more moderate price growth and reduced competition compared to the peak seasons of spring and early summer. This shift is reflected in Zillow's data, which shows that the typical U.S. home value only increased by 0.2% from July to August.
This represents a significant cooldown following the red-hot monthly appreciation witnessed in the spring and early summer. The nation's typical home value has now reached another record-breaking high at $351,423, marking a 1.3% upturn from the previous August.
Home values in 32 of the 50 largest US metropolitan areas rose in August, with Hartford, Buffalo, San Diego, Cleveland, and Providence leading the way.
Hartford saw the biggest monthly increase, with home values rising 1.3%. Buffalo was next, with home values up 1.0%. San Diego, Cleveland, and Providence all saw home values increase by 0.9%, 0.7%, and 0.7%, respectively.
In the Phoenix, AZ area, the August Zillow Home Value Index (ZHVI) stands at $451,461, reflecting a year-over-year change of -6.4%.
As is customary during this season, price cuts on property listings are increasing, affording buyers additional time for deliberation. In August, properties typically took 13 days to go pending, extending by one day compared to July. Additionally, sales activity declined, with 19% fewer newly pending home listings compared to the prior year, mirroring approximately a year-over-year downturn of 15% observed in July.
While mortgage rates continue to be volatile, home shoppers on Zillow can use an affordability calculator to ensure their search aligns with their budget, allowing them to explore a range of monthly payment options.
Bottom Line
The late-summer housing market slowdown brought unexpected relief for home buyers through increased listings and moderate price growth. While challenges remain, this positive turn of events suggests a potentially more balanced market in the coming months, offering hope to those searching for their dream home.
To check out the full report, view Zillow’s August 2023 Housing Market Report here.
Ryan Meeks is a Real Estate Professional serving the entire Phoenix Metro area! Ryan Meeks and his team can by contacted at Ryan@Meeksteam.com or by phone at (480) 612-2219. Be sure to visit our YouTube Channel for more great content YouTube.com/EscapeToArizona
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