Zillow: New Listings ‘Surge’ Could Relieve Frustrated Shoppers
The inventory crunch bedeviling home searchers could start to turn around as record appreciation of home values entices more owners to sell, reported Zillow, Seattle.
Meanwhile, apartment rents are gaining momentum and touching double-digit annual gains in hot markets, which could move some renters into the homeownership market, Zillow said in its Monthly Market Report.
Although continued demand for homes pushed total for-sale inventory down 1.1 percent in March, the monthly decline was the smallest seen since July due to a “rush” of new inventory–up 30 percent from late February to late March–that indicates sellers are following the traditional pattern of listing their homes in the spring, Zillow said.
“March often sees a boost in inventory, and the return to some seasonal norms is a positive sign that supply is beginning to catch up with demand,” said Zillow Economist Treh Manhertz. “With home values skyrocketing, vaccination rates rising and employees getting long-term guidance on where they can work, we expect an increasing number of homeowners to join the market and list in the coming months.”
Manhertz called the inventory increase “welcome news” to home shoppers who have seen bidding wars and homes plucked from the market weeks faster than usual.
Home value appreciation accelerated in March, rising a record 1.2 percent month-over-month to $276,717, Zillow reported. This represented the largest monthly rise in at least 25 years and a nearly $3,200 jump in value from February to March for the typical home. Annual appreciation rose to 10.6 percent, the largest jump in 15 years.
Zillow economists forecast 6.4 million homes will sell this year–up 13.5 percent from 2020 and the strongest year for sales since 2006–and expect home values to rise 10.4 percent over the next 12 months.
Though the rapid rise in home values has stoked fears of another housing bubble, strong fundamentals underpin the market, the report said. Average credit scores among buyers are much higher than in the early 2000s, lending standards are tighter and demand going forward–including from a wave of millennials aging into homebuying–is expected to keep sales strong in the coming months.
Apartment rents rose dramatically in March, “beginning to make up ground after a slump that began this time last year,” Zillow said. the research firm’s Observed Rent Index rose to $1,721, up 0.9 percent over February and the largest monthly increase since 2014. March was the third consecutive monthly increase, bringing annual growth back above 1 percent for the first time since July.
“Rents have been softer since the beginning of the pandemic in many large markets and fell in the priciest ones–though Zillow research shows those savings were limited to the most expensive zip codes,” the report said. “In March, rents rose at an accelerated rate almost across the board, though the highest year-over-year growth is taking place in the Inland West and Sun Belt, along with some more affordable metros in the Midwest and Rust Belt.”
