Is the Housing Market Becoming More Balanced?
Improving economic conditions and a surge in available inventory helped to create a more balanced housing market in May, according to housing market platform Zillow. With inventory up nearly 20% and available home listings rising by 4.5% year-over-year, buyers had more options in May than at any time since July 2020. With more time to decide and economic concerns easing for buyers, sales rose by 3.5% from April to May.
Falling home values could aid future sales
Home values are falling in some parts of the U.S., further helping to bolster sales. The typical U.S. home is valued at $366,289, and the typical monthly mortgage—assuming a 20% down payment—is $1,922.
Home values have fallen in 22 of the 50 largest metro areas over the past year, and sellers cut prices on almost 26% of listings nationwide in order to incentivize buyers. In Austin, Texas; Tampa, Fla.; and Dallas, home values fell by 5.5%, 5.4%, and 3.4%, respectively.
Still, home values grew in many other parts of the country. Since May 2024, home prices rose in 28 of the 50 largest metro areas, led by Cleveland (4.6% growth), New York City (4.3%), and Louisville (4.3%).
Despite more balanced conditions, renting remains a popular choice for many households
Although the market is becoming more balanced, affordability concerns persist for much of the U.S., leaving renting a more likely option for many households. Rent for a typical single-family home is roughly $100 cheaper per month than the mortgage payment on the typical U.S. home, even after a 10% down payment, a switch-up from previous years. Just six years ago, renting was $373 per month more expensive than buying a home.
How have housing market conditions changed over the last several quarters?
- Here’s Where the Housing Market Is Headed in Q3 2024: Home sales in the first half of 2024 were challenged by growing home prices and elevated mortgage rates.
- Housing Market Shifts to Neutral for First Time in More Than 6 Months: In August 2024, the housing market began to head into a more balanced position, offering better conditions for both buyers and sellers.