Competition among buyers over few available houses has made this home shopping season unusually hot, according to the latest market report1 from Zillow®. Meanwhile, high mortgage rates are continuing to deter homeowners from listing, pushing inventory to record lows.
“Many homeowners are still opting not to sell and give up historically low mortgage rates. But those who do have been rewarded with bidding wars as buyers compete for limited options,” said Zillow senior economist Jeff Tucker. “Spring is traditionally the hottest time of year in the housing market, and 2023 has been no exception. Time will tell if seasonal price slowdowns arrive on time this year, later in summer.”
Typical U.S. home values grew by 1.4% from April to May, the strongest monthly appreciation since last June. That’s a few degrees cooler than the previous two springs, but hotter than in 2018 or 2019. The typical home value is $346,856 — up 0.9% over last May and up 3.4% from a recent low in January.
A new loan on a home priced at the typical value in the U.S. would feature monthly mortgage payments just shy of $1,800. That monthly payment is 22% higher than last year, double that of May 2019, and the second highest on record after October 2022.
Regional appreciation trends
Affordability is still the key driver of demand, and that’s reflected in the markets that are appreciating fastest. The largest monthly home value gains are in the Midwest — home to six of the seven metros with the biggest gains in May. Columbus, Ohio, led the way (2.2% monthly gain), followed closely by Cincinnati, Detroit, Richmond and Milwaukee.
Price growth also sprang back in West Coast tech hubs after prices fell significantly there late in 2022. Home values rose faster than the national average for the second straight month in San Jose (1.9%), Seattle (1.7%) and San Francisco (1.4%).
Inventory shortage drags on, driven by high rates
A shortage of new listings has dogged the housing market…
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