New construction and recovering inventory are helping shift markets in favor of buyers down south

• More markets are tilting in favor of buyers — including a few outside the South.
• Sold homes are typically on the market for 23 days before selling, a week faster than last year.
• October's mortgage-rate rebound raised monthly mortgage costs by 2.8% over September.

SEATTLE, Nov. 20, 2024 /PRNewswire/ -- Home buyers are gaining leverage in negotiations across the nation as competition eased in October, the latest market report¹ from Zillow® shows. Zillow's market heat index indicates competition nationwide is creeping closer to becoming a buyers market as activity winds down for the winter. 

"We're seeing competition among buyers fade, with mortgage rates climbing back toward 7% as we move closer to the usual winter slowdown," said Skylar Olsen, Zillow chief economist. "Inventory is still slowly building back up and price cuts are still relatively common — persistent buyers may be able to find a deal or negotiate for worthwhile concessions." 

Unlike mortgage rates and holiday-style seasonality, which show up nationwide, seasonal inventory trends are local. The moving decisions of buyers and sellers may not be as hampered by winter weather in Southern states, for example. 

Even more of a differentiator is the inventory recovery from record lows during the pandemic in the South and select other areas that has helped push the scales of competition in favor of buyers — most prominently in Texas, Florida and in the New Orleans metro. 

Now, buyers farther afield are jumping into the driver's seat. Pittsburgh and Louisville joined 11 other major metros in October where buyers have an edge in negotiations. That comes on the heels of Indianapolis, Nashville and Atlanta becoming buyers markets in September. 

With today's persistently high home prices and mortgage environment, competition among buyers has a lot to do with available inventory. Each of the 13 major markets where buyers currently have an edge are among the top 20 nationwide in terms of inventory recovery compared to pre-pandemic levels. 

Reduced competition translates to softer home value appreciation. Monthly drops in home values are the largest in Austin, Dallas, Atlanta, Tampa and San Antonio. The median number of days a listing stays on the market has risen the most in Southern markets as well, compared to before the pandemic. 

Inventory nationwide is continuing on a long road to recovery from a deficit that developed early in the pandemic; it now stands roughly 28% below pre-pandemic norms for this time of year. That's the smallest shortfall since September 2020 and marks major progress over a 36% deficit in March, a 2024 low. 

New construction is another piece of the puzzle. Where builders have been better able to keep up with housing demand, balance is returning to markets sooner, and home price appreciation and rent growth have generally flattened out.

Mortgage rate relief in September was short-lived
The relief that home buyers felt in September from a dip in mortgage rates was brief. Rates ticked back up in October, giving back some affordability gains. Mortgage payments on a typical home purchase rose 2.8% month over month in October, after falling for four consecutive months. Still, monthly mortgage payments (using a 20% down payment) are down more than $100 per month compared to the peak in May and are $179 less than in October of last year. 

Mortgage rates should continue to be volatile in the coming months. The BuyAbility^SM tool from Zillow Home Loans uses real-time mortgage rates to give buyers a current and personalized estimate of the home price and monthly payment that fit their budget.

¹  The Zillow® market report is a monthly overview of the national and local real estate markets. The report is compiled by Zillow Research. For more information, visit www.zillow.com/research.

About Zillow Group:
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing, and renting experiences. 

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All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2024 MFTB Holdco, Inc., a Zillow affiliate.

SOURCE Zillow