Press releases

Buyers are in the game, but interest rates are keeping sellers on the bench

Mar 21, 2023

Relatively high rates are keeping new listings low, frustrating willing buyers

  • New listings are at a record low for February, contributing to an incredibly low supply. 
  • Sales activity lost momentum in February as rates rose. 
  • U.S. home values stabilized after a six-month decline.
  • Well-priced homes are moving. At 17 days, the median time to pending is faster than before the pandemic. 

SEATTLE, March 21, 2023 /PRNewswire/ -- Mortgage rates — both their high levels and their wild swings — are making life difficult for both buyers and sellers, according to Zillow's® latest market report1. Relatively high rates have brought new listings down to record lows, leaving buyers with limited options. Any dips in mortgage rates are stimulating demand and stiffening competition, but they have been short-lived. 

"We know there are a lot of motivated buyers looking for homes. When we see mortgage rates fall, sales pick up," said Skylar Olsen, Zillow chief economist. "But buyers are disappointed in their options. Homeowners aren't giving up their current house and low monthly payments to join a tight, expensive market. Meanwhile, volatility in the economy makes planning extremely difficult." 

The flow of new listings in February is at a record low for this time of year, nearly a third lower than before the pandemic and 22% lower than last year. Mortgage rates are likely driving the decline — those who bought or refinanced in 2020 or 2021, when rates were well below 3.5%, are unwilling to trade in their current mortgage for a new one with double the interest, Olsen said. The largest annual declines in new listings are in West Coast markets: San Jose (-47%), Portland (-46%), Seattle (-45%) and Sacramento (-44%). 

The trickle of new listings is contributing to extremely low levels of total inventory, now 17% higher than what was the absolute bottom in February 2022, but still about 43% below pre-pandemic norms. Instead of inventory growing through the first two months of the year, like it did in 2018 and 2019, the number of choices shrank.

"This market is not as frenzied as it was during the last two years, but home buyers might start to feel some déjà vu at the dearth of options," said Jeff Tucker, Zillow senior economist. "Home sellers seem to be sitting out the early spring selling season in surprising numbers."

Mortgage rates have been incredibly volatile over the past six months, and buyers are responding to the chance to lock in a cheaper monthly payment when the opportunity arises. Sales activity is picking up, just not accelerating like it usually does at this time of year. After being reinvigorated by lower rates in late January, sales slowed over the course of February as rates hiked back up. All in all, February saw 19% fewer newly pending sales than last year and 5% fewer sales than the most recent pre-pandemic reading in 2020. 

Ultralow inventory means that when attractive, well-priced houses do come on the market, they are readily finding buyers. Homes that went under contract in February did so after a median span of 17 days. That's more time than in 2022 and 2021, when time on market was seven and nine days, respectively, but significantly less than before the pandemic.

Home values flatlined from January to February, leaving the typical home value at $328,604, or 4% below the peak value set in July 2022, according to the Zillow Home Value Index. Home values are 4.4% higher than one year earlier — a rapidly decelerating pace of annual growth, down from the nearly record-high 18.8% year-over-year growth measured last April. The overall lack of inventory, along with the resurgence of buyers when costs fall, should prevent significant price declines. 

Rates are likely to remain volatile through the spring selling season. Working with a mortgage professional early in the process can help buyers demystify what's affordable, prepare their credit and get pre-approved to strengthen their offer.

Metropolitan
Area*

February Zillow Home Value Index (ZHVI) (Raw)

ZHVI Change, Year over Year (YoY)

Monthly Mortgage Cost (at 20% Down)

Monthly Mortgage Cost Change, YoY

Total Inventory Change Since February 2020

New Inventory Change Since February 2020

Median Days on Market 

United States

$328,604

4.4 %

$1,675

46.3 %

-38.1 %

-31.4 %

17

New York, NY

$564,512

3.5 %

$2,865

42.8 %

-43.9 %

-45.7 %

33

Los Angeles, CA

$847,694

-2.4 %

$4,407

38.4 %

-31.4 %

-41.0 %

19

Chicago, IL

$282,657

2.5 %

$1,433

42.0 %

-49.4 %

-43.7 %

12

Dallas, TX

$362,237

1.6 %

$1,859

44.6 %

-44.0 %

-41.7 %

17

Houston, TX

$296,706

3.3 %

$1,519

45.7 %

-30.2 %

-30.7 %

25

Washington, DC

$523,130

0.4 %

$2,673

39.8 %

-39.3 %

-40.3 %

7

Miami, FL

$446,337

10.5 %

$2,276

55.5 %

-38.8 %

-24.3 %

30

Philadelphia, PA

$321,429

5.7 %

$1,633

46.9 %

-39.7 %

-33.4 %

10

Atlanta, GA

$356,353

3.6 %

$1,825

46.6 %

-36.1 %

-33.3 %

20

Phoenix, AZ

$428,063

-1.9 %

$2,202

38.3 %

-2.5 %

-26.8 %

38

Boston, MA

$608,548

1.5 %

$3,109

42.3 %

-39.7 %

-39.6 %

9

San Francisco, CA

$1,079,746

-7.7 %

$5,556

31.0 %

-15.1 %

-36.9 %

14

Riverside, CA

$537,289

0.2 %

$2,772

41.8 %

-32.7 %

-38.5 %

27

Detroit, MI

$226,017

3.9 %

$1,146

44.5 %

-35.6 %

-32.6 %

15

Seattle, WA

$683,838

-3.9 %

$3,513

36.8 %

-16.3 %

-38.0 %

9

Minneapolis, MN

$349,932

0.3 %

$1,787

39.6 %

-46.7 %

-46.7 %

19

San Diego, CA

$828,029

-1.7 %

$4,250

39.7 %

-43.5 %

-43.2 %

12

Tampa, FL

$357,951

5.2 %

$1,831

49.5 %

-21.7 %

-24.3 %

21

Denver, CO

$568,870

-2.4 %

$2,921

37.4 %

-20.5 %

-26.1 %

9

St. Louis, MO

$224,179

4.9 %

$1,139

46.2 %

-51.1 %

-30.0 %

6

Baltimore, MD

$348,165

3.7 %

$1,763

42.5 %

-49.0 %

-38.3 %

8

Charlotte, NC

$353,739

4.0 %

$1,811

47.0 %

-2.5 %

-28.6 %

19

Orlando, FL

$376,324

5.8 %

$1,928

49.9 %

-23.0 %

-27.2 %

20

San Antonio, TX

$286,504

3.5 %

$1,464

45.3 %

-16.2 %

-18.8 %

28

Portland, OR

$524,621

-1.9 %

$2,691

37.4 %

-26.5 %

-38.5 %

12

Sacramento, CA

$544,971

-4.5 %

$2,803

34.4 %

-31.8 %

-45.3 %

17

Las Vegas, NV

$393,156

-2.1 %

$2,028

38.9 %

-13.7 %

-38.9 %

43

Pittsburgh, PA

$189,207

1.3 %

$964

41.9 %

-36.7 %

-24.9 %

11

Austin, TX

$475,191

-4.3 %

$2,451

37.2 %

25.8 %

-20.1 %

60

Cincinnati, OH

$253,512

4.8 %

$1,288

45.9 %

-38.5 %

-25.5 %

5

Kansas City, MO

$276,419

5.8 %

$1,404

47.2 %

-49.0 %

-38.5 %

5

Columbus, OH

$285,430

5.6 %

$1,454

48.4 %

-36.0 %

-28.6 %

5

Indianapolis, IN

$260,160

3.5 %

$1,325

45.4 %

-27.9 %

-20.6 %

10

Cleveland, OH

$201,852

6.2 %

$1,026

47.9 %

-47.7 %

-24.2 %

9

San Jose, CA

$1,381,757

-6.1 %

$7,225

35.6 %

-25.8 %

-39.0 %

17

Nashville, TN

$415,828

3.3 %

$2,128

46.7 %

-22.2 %

-21.9 %

21

Virginia Beach, VA

$314,340

4.3 %

$1,602

44.4 %

-49.8 %

-31.3 %

21

Providence, RI

$419,810

4.7 %

$2,139

46.9 %

-60.1 %

-40.0 %

10

Jacksonville, FL

$348,466

6.1 %

$1,785

51.3 %

-16.9 %

-24.7 %

37

Milwaukee, WI

$287,671

5.6 %

$1,457

45.4 %

-42.5 %

-29.3 %

20

Oklahoma City, OK

$217,846

6.9 %

$1,112

49.6 %

-24.5 %

-16.7 %

11

Raleigh, NC

$415,939

2.4 %

$2,129

45.2 %

-30.2 %

-33.8 %

13

Memphis, TN

$223,942

5.3 %

$1,142

48.0 %

-16.8 %

-18.7 %

24

Richmond, VA

$335,501

7.4 %

$1,706

49.5 %

-51.2 %

-36.9 %

6

New Orleans, LA

$230,141

-0.2 %

$1,166

36.7 %

32.4 %

21.7 %

29

Louisville, KY

$237,002

4.1 %

$1,207

44.5 %

-37.1 %

-20.4 %

7

Salt Lake City, UT

$519,638

-2.0 %

$2,657

37.5 %

-4.5 %

-30.2 %

20

Hartford, CT

$309,095

6.9 %

$1,571

49.3 %

-68.1 %

-41.9 %

6

Buffalo, NY

$230,715

4.1 %

$1,176

46.1 %

-42.3 %

-21.5 %

11

Birmingham, AL

$232,880

5.7 %

$1,184

47.5 %

-24.8 %

-22.1 %

12

*Table ordered by market size 


1  The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z) (NASDAQ: ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease. 

Zillow Group's affiliates and brands include Zillow®; Premier Agent®; Zillow Home Loans℠; Zillow Closing Services℠; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠ , which includes ShowingTime®, Bridge Interactive®, and dotloop® and Listing Media Services. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

 

SOURCE Zillow

For further information: Mark Stayton, Zillow, press@zillow.com