Housing inventory continues its recovery for the second consecutive month in June, showing the potential for a rebalanced market, according to the latest Zillow Real Estate Market Report.
The demand for homes remains strong and competition intense. National home value growth continues to accelerate month-over-month from 1.8% in May to 2% in June — a new record high in the series' history. Home value appreciation also broke annual records for the second consecutive month in June with 15% growth over last year.
Monthly growth accelerated in 48 of the top 50 metro areas, ranging from 1.1% in New Orleans to a panic-inducing 5.1% in Austin. New Orleans’ annual home value appreciation was quite healthy at 10.1% compared to Austin's astronomical 36.8%, sitting ahead of Phoenix's 26.6%.
Intense demand through the duration of the pandemic sent inventory plummeting 33% year-over-year in April 2021. This ramped up competition for homes and elevated prices to new heights. But inventory has shown signs of recovery since then, with a 3.9% improvement in May, followed by a 3.1% increase in June. Inventory is now 29.2% below 2020 levels.
Jeff Tucker, senior economist at Zillow, said, “Another month of rising housing inventory gives buyers some additional options and a little more bargaining power. While the level of inventory remains incredibly low by historic norms, it is now on a trajectory that should give buyers reason to hope for a cooldown in price growth this winter, consistent with normal seasonal trends.”
Zillow economists forecast that home values will continue to increase and reach 13.2% year-over-year growth in June 2022. Additionally, in June they’ve forecasted 6.02 million home sales in 2021, a 6.6% increase over 2020 — a more bullish prediction than in May.
Also, rent growth maintained its momentum in June as the Zillow Observed Rent Index (ZORI) increased 1.8% month-over-month. The typical U.S. rent now stands at $1,799. This is partially due to rebounding demand in pricey urban areas that previously suffered downturns from pandemic-driven office closures. Annual rent growth in June reached 7.1%, the largest in the series’ history since 2015. Quarterly rent growth also reached a record-breaking 5.8% since March.
The fastest monthly rent growth was seen in the nation’s sunniest cities, Las Vegas (3.6%), Tampa (3.4%), Austin (3.4%) and Phoenix (3.3%).
Click here for the full Zillow Market Report, including a list tracking mortgage rates by third-party lenders.
