Home sales are ticking up and price declines are leveling off as buyers ready for the spring sales season. But sellers have yet to join the fray — the number of homes for sale is the second-lowest on record — meaning stiff competition for well-priced homes, according to the latest Zillow® market report1. What mortgage rates do next will have a huge impact on the market’s momentum.
“Now as a buyer, you can slow down, have your inspection and make a strong, well-informed offer,” said Ryan Platzke, Realtor at Helgeson/Platzke Real Estate Group and member of Zillow’s Premier Agent program in Minneapolis. “And as a seller you are still in a very good position; you won’t see the 10 offers all cash, noncontingent, etc. But you will see one, maybe three offers, usually that first or second weekend, where you’ll be able to select which one to go forward with and comfortably make a decision.”
The typical U.S. home value was nearly flat from December to January, slipping just 0.1% and resting at $329,542, or 4.1% below the peak value set in July 2022. Despite the recent drop, it remains 6.2% higher than a year ago, and 39% higher than before the pandemic.
Buyers returning, but potential sellers opt out
The number of people buying homes has ticked up since the fall and is looking like a normal, pre-pandemic January. At a low point in November, newly pending listings were down 38% compared to one year earlier. In January, they were only down 20% from the previous year and were right in line with 2020.
Previously priced-out buyers were likely encouraged by mortgage rates that fell from a peak of 7.08% in November to 6.09% by Feb. 22 before ticking back up. This dramatically improved shoppers’ ability to buy. A new mortgage for a typical home using a 5% down payment cost $2,310 in October; that fell to $2,100 by the end of January. But conditions are still far more challenging than they were before the pandemic — in January 2020, a monthly payment was $1,127.
But…
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