Home shoppers experienced an unexpected reprieve in August, with new listings rising during a period that in the last five years typically sees a slowdown. Notably, around 350,000 homes were listed for sale across the nation, marking a 4% increase from July.
Despite being more than 20% below pre-pandemic figures, this uptick in fresh listings is a pleasant surprise, as new listings have typically dwindled every August, according to Zillow data since 2018.
"Competition for houses tends to ease up at this time of year, giving buyers more time to decide and a better chance to negotiate on price," said Jeff Tucker, Zillow senior economist. "What we didn't expect — especially considering 7-plus-percent mortgage rates — was more new listings. The inventory crunch is still far from resolved, but this was a small step in the right direction."
However, the housing market remains tight. August's slight increase in new listings only cut the annual deficit in half, from a drop of 26% year over year in July to a decline of 13% in August. Moreover, total inventory remains alarmingly low, about 42% below the levels seen in August 2019, although it did rise 2.2% from July 2023 figures.
Homeowners who bought or refinanced to ultra-low mortgage rates in 2020 or 2021 have been loath to sell, which has kept new listings at seasonal record lows (with the exception of April 2020) for 14 straight months.
The data also shows a cooling of the red-hot property market, with the U.S. home value growth rate slowing to 0.2% month over month. Yet, the typical home value reached another record, standing at $351,423, marking a 1.3% increase from August of the previous year.
The changes in home values varied across the nation. Hartford, Conn., Buffalo, N.Y., San Diego, Calif., Cleveland, Ohio, and Providence, R.I., led the upward trend. In contrast, cities like New Orleans, Austin, San Antonio, Denver, and Dallas experienced declines in home values.
While the late summer saw an unexpected boost in supply, this does not necessarily signal an end to the inventory crisis. Most metropolitan areas still report higher home values than last year, with several witnessing month-over-month drops in August.
Additionally, the time homes spent on the market before going into pending status increased to a median of 13 days, up from 12 days in July. Simultaneously, sales activity showed a deceleration, with 19% fewer newly pending listings in August compared to the previous year.
As the housing market heads into the fall, mortgage rates remain unpredictable, reacting to the latest economic data and remarks from the Federal Reserve. With this volatility, potential homebuyers are advised to use tools like Zillow's affordability calculator to ensure their searches align with their budgets.
In contrast, the rental market exhibited steadier trends. Asking rents in August rose by 0.3%, slightly faster than the pre-pandemic average for this period but slower than the growth rates observed in August 2021 and 2022. Overall, rental market trends are reverting to more typical patterns.
