The home shopping season has rapidly begun to peak as anxious buyers chase after new listings that are few and far between, driving inventory to record lows in December. Limited supply continues to push price growth upwards, according to Zillow’s last market report, and monthly home value appreciation accelerated for the first time since July.
Not only are anxious buyers tightening our housing supply, but anxious sellers are hesitant to list their homes due to the uncertainty of a Covid resurgence and employers’ rising uncertainty about post-pandemic working arrangements. According to Zillow’s survey, 52% of workers reported that their employer had announced post-pandemic work arrangements. One possible explanation is that the rise of new Covid variants has caused employers to push back in-person start dates indefinitely.
Additionally, the rise of omicron could be responsible for the low number of homes for sale, pushing homeowners to wait until infection rates subside.
"Home shoppers picked the shelves clean this December, leaving fewer active listings than ever before in the U.S. housing market," said Jeff Tucker, senior economist at Zillow. "Enough determined buyers kept up their house hunt to reignite monthly price appreciation. Rising mortgage rates could be the next potential headwind, but demand has proven persistent; neither high prices nor slim inventories have deterred buyers so far."
The typical home value is up 19.6% from December 2020, averaging $320,662. The annual growth rate from December 2020 to 2021 represents an all-time high, dating back more than 20 years. The annual growth rate began to decelerate in July, but month-over-month home appreciation reignited, jumping from 1.2% in November to 1.4% in December.
Sparse home inventory has been driving home appreciation since November 2021, when housing supply began to slip before plummeting 11.1% in December to a new record low of 923,000 homes.
Buyers in December had a hectic time with 19.5% fewer houses to choose from than they did last year when inventory was already desperately low, proving that things can indeed go from bad to worse. Compared to relatively normal levels, like December 2019, there are 40.5% fewer homes available for sale.
On the bright side, the speed of the market has slowed down since the summer of 2021. June set the record with the typical U.S. home spending one week on the market before going under contract. That pace has decelerated every month until 13 days into December. Relative to other years, that’s still a short time on the market, but those few extra days make a big difference to buyers.
Meanwhile, typical rents rose 15.7% year-over-year in December, to $1,855 per month. However, monthly growth was only 0.7% in December, the lowest monthly growth seen since last February.
