The Blubber

"A growing segment of homes that are not competitively priced or well marketed are lingering on the market. Sellers are increasingly lowering prices to attract buyers who are struggling with affordability," said Skylar Olsen, chief economist at Zillow. "For years, the housing market has been characterized by quick sales and limited options. Now, it's starting to resemble the pre-pandemic market in terms of competition, if not costs. As the wait for mortgage rate relief continues, slower price growth and even declines in some areas will help buyers catch up on saving for a down payment."

Inventory Slowly Recovers

The number of homes available on the market has been rising throughout the year, increasing by 4% from May to June and standing nearly 23% above last year's low. While inventory levels are still about 33% below pre-pandemic averages, this is the smallest shortfall since the fall of 2020, when the number of available homes was rapidly decreasing.

Inventory is higher than last year in all of the 50 largest U.S. metropolitan areas except for New York and Cleveland, and it rose month over month in all but five areas.

Attractive listings are selling relatively quickly, but buyers still have a bit more time to consider their options compared to last summer. Homes sold in June were typically on the market for 15 days before an offer was accepted, which is five days shorter than pre-pandemic norms and the smallest difference since June 2020.

High Costs Weigh on Buyers

Although mortgage rates have eased from their peaks in May, buyers are still dealing with costs that have risen much faster than wages. A median-income household can afford mortgage payments on a typical home in only 11 out of 50 major markets, even with a 20% down payment.

With many buyers sidelined by high costs, Zillow's Sales Nowcast in June saw a 9% drop from May, with sales 35% lower than pre-pandemic norms.

Slowing Appreciation Could Give Buyers a Break

Home value growth has slowed as inventory increases. Annual appreciation stands at a moderate 3.2% nationally, down from a peak of 4.6% in March 2024. Monthly growth has decelerated to 0.6%, marking the slowest June appreciation since 2011.