The arrival of a fresh wave of inventory in the market brings good tidings for prospective homebuyers gearing up for their next residence this spring. It also serves as additional proof that the impact of "rate lock" on homeowners is beginning to diminish, per Zillow’s most recent monthly update.
"For more than a year, Zillow homeowner surveys have shown an elevated share of homeowners expecting to sell in the next three years. We're finally beginning to see owners who have been putting off moves return to the market," said Skylar Olsen, chief economist at Zillow. "For many households with record-high equity, waiting out potentially lower rates later in the year may not be worth it."
Buyers are seeing more choices on the market, which could spur sales this spring. New listings of existing homes on Zillow are up 21% in February compared to last year and rose 20% from January.
And with buyers coming off the sidelines, first-time homebuyers are expressing optimism about the 2024 housing market, per TD Bank. With home prices temporarily edging downward following their all-time high in 2023, according to the January CoreLogic Case-Shiller Index, TD's Annual First-Time Homebuyer Pulse found that of those looking to buy a home in the next year, 74% of respondents felt optimistic about the housing market. And nearly all (97%) have already started taking initial steps in the homebuying process.
About half (47%) have started saving for a down payment and 38% of survey respondents have established a budget for their home purchase.
The survey also revealed first-time homebuyers are willing to spend more on their first homes, with 40% citing they plan to spend $300,000 or more, up 9% from last year.
Inventory and New Listings
New listings trended across the country, with counts up annually in each of the 50 largest U.S. metros. They're coming on strongest in the South, especially Texas and Florida, with Zillow citing robust new construction in those areas likely helping to give existing homeowners somewhere to move to, freeing up existing inventory.
Total inventory is up 12% nationally compared to last year, according to Zillow. At just over 900,000, there were more homes for sale in February than in any February since 2020. Annual increases are highest in Dallas (up 39%), Tampa (31%), Orlando (30%) and Miami (29%).
Even with the rise in supply in February, competition persists. Homes that were placed under contract during February typically achieved this milestone after 17 days — a pace slower than the frenzy induced by rates in 2021 and 2022, yet significantly quicker than pre-pandemic times.
Aspirationally priced listings, or those lacking real or virtual curb appeal, are sitting on the market longer. The average time on Zillow for all homes was 53 days, which is longer than normal for this time of year.
One in five listings on Zillow is seeing cuts as sellers bring their expectations closer to where buyers can meet them. Most sellers will have plenty of leeway to absorb a price cut and come out ahead from when they bought their home. Typical home values are up from last year in all but three major metros, and values have risen 41% nationwide since before the pandemic.
Housing costs continue to climb
The typical home in the U.S. is worth $349,216, per Zillow’s Home Value Index — up 40.8% compared to before the pandemic. Monthly gains were largest in expensive coastal metros: San Jose (1.6%), San Diego (1.3%), Seattle (1.2%), San Francisco (0.8%) and Washington, D.C. (0.8%).
