Zillow May Market Report: Housing Recovery ‘Back on Pause’

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Home sales and new listings fell behind last-year levels in May as mortgage rates rose steadily, the latest Zillow Market Report found.

New listings generally peak in May or June, but sellers pulled back this May; new listings ticked down 0.8% month over month, and now stand 4.1% lower than last year. Sales did trend up from April, rising 4.8% month over month, but they fell off the historic trend line, declining 2.9% from last year, Zillow reported.

Meanwhile, inventory growth continued to rise on an annual basis, extending an unbroken streak of annual growth to 30 straight months. However, the pace slowed, inching up 1% from last year.

Typical home values rose slightly (0.6%) on a monthly basis to $368,720. Combined with higher mortgage rates, that brought the cost of a typical mortgage to $1,861, rising 1.1% from April to May. However, mortgage rates remain lower than this time last year; even with a 0.8% annual growth in home values, typical mortgage costs are still lower than last May. “May housing results were disappointing for those hanging on to hope of a stronger year for sales,” Zillow Chief Economist Mischa Fisher said. “Inventory is rising, but weekly data suggests it could flatline in the next four weeks. A June peak for options home shoppers have to choose from would be early on the calendar, possibly foreshadowing slower sales in the second half of the year.”