June 2017 Market Report: Inventory Is Down, but Listings Aren’t – Zillow Research
- The Zillow Home Value Index reached $200,400 in June, up 7.4 percent from a year earlier.
- Rents grew 1.1 percent to a Zillow Rent Index of $1,422 a month.
- Inventory dropped 11.4 percent, but new listings remain relatively flat.
Voracious demand from home buyers coupled with shrinking inventory continues to push the Zillow Home Value Index higher: The U.S. median home value passed $200,000 for the first time ever in June. Inventory is tight and home values are rising, and it’s easy to assume that the main culprit for shrinking inventory is a shrinking number of homes being listed for sale.
Easy, but wrong.
The number of new homes entering the market has been at roughly the same low level throughout the recovery. In June 2017, 561,740 homes were newly listed nationwide – roughly even with the 544,482 homes listed in June 2016 and the 577,821 listed in June 2015.
Why, then, does inventory continue to drop? It fell 11.4 percent nationwide from June 2016. Some markets experienced far greater annual inventory declines: 39.4 percent in San Jose, Calif., 32.9 percent in Columbus, Ohio, and 32.5 percent in San Diego.
The key is not fewer listings, but white-hot demand: Although homes continue to hit the market at roughly the same rate, buyers are snapping them up faster. The median number of days homes are spending on market has trended steadily downward, falling to just 73 days in May – the lowest figure recorded since Zillow began tracking such data and down from 111 days in May 2012. This causes the number of homes for sale at a given point in time to seem especially limited.
The result is home values that continue to climb. The national median home value reached $200,400 in June, up 7.4 percent from June of last year. But while home values keep rising at a breakneck pace, U.S. median rent is growing at a much slower pace – up 1.1 percent from a year ago, to $1,422/month – and actually fell year-over-year in June in 12 of the 35 largest U.S. metros. The Zillow Rent Index fell the most in Pittsburgh (down 4 percent) and Houston (down 3 percent). Miami, San Jose and San Francisco are also among the metros where rent is cheaper this year than last.
Inventory would be even lower if homeowners had pulled back listing their homes for sale. As it is, new listings have been flat – which hasn’t exactly helped frenzied home shoppers struggling with limited selection, but at least listing volume hasn’t fallen. And that represents somewhat of a silver lining for buyers struggling to compete. They should keep their chins up and, more importantly, their eyes open: Odds are roughly as good today as they’ve been in recent years that the home that’s right for them could be listed tomorrow. Buyers just need to be prepared to act faster than ever to get it: To know their budget, to get pre-approved and to work with a knowledgeable and well-connected local real estate agent that can help them get through the process quickly and efficiently.