According to the most recent Zillow Market Report, the typical U.S. home value has surpassed $350,000 for the first time ever due to strong demand from buyers and a shortage of homes for sale.
Despite facing affordability challenges and low housing inventory, home buyers have persisted in the market. The demand for homes has remained high, causing home values to increase steadily for the past four months. The new peak of $350,213 is almost 1% higher than the previous record set in July 2022.
Affordability remains a critical factor driving the market, with lower-priced metro areas experiencing the largest monthly gains. Cities like Chicago, Buffalo, New Orleans, and Hartford saw significant growth in home values during the previous month, with typical home values below the national average.
However, the lack of new listings is intensifying the housing market’s challenges. While new home listings slightly increased by 2.4% month over month, the annual deficit worsened, with 28% fewer listings compared to the previous year. The limited inventory is attributed to higher mortgage rates and homeowners potentially holding out for even higher prices before selling.
As a result of the decreased supply and growing affordability concerns, competition among buyers may be slightly cooling off. Metrics indicate a drop in demand and competition, with fewer pending listings and listings lasting slightly longer on the market compared to the previous month.
On the rental side, rent growth has returned to pre-pandemic levels, increasing by approximately 0.6% per month. San Diego has overtaken San Francisco as the third-most-expensive city for renters.
In summary, the U.S. housing market continues to face challenges of limited inventory, high demand, and affordability concerns. While there are signs that competition is easing, the situation is unlikely to see significant price declines until more homeowners decide to list their properties for sale.
