The housing market continued to cool in September, though rebalancing from monumental appreciation is producing vastly different conditions depending on region and metro, according to a new report from Zillow released this week.
Zillow’s September Market Report found that sales slowed significantly in September. The number of newly pending listings fell 18% month-over-month and are down 29.3% compared to last year, in part because of a sharp deceleration in activity at the end of the month, when rates were highest. Sales are down more than 6% from September 2019. Mortgage rates—the largest driver of monthly payments—rose through September and are so volatile, they are hurting buyers’ ability to plan for the future.
Key highlights:
- The typical U.S. home value is $358,283, up 12.9% from last year and nearly $110,000 (43.5%) above 2019. Of the 100 largest metros, exactly half saw home values rise from August to September.
- Home values have fallen the furthest from peak levels in expensive and high-growth metros in the Mountain states and on the West Coast; the largest drops are in Austin (-8.2%), San Francisco (-7.9%) and Salt Lake City (-6.8%).
- Among the 100 largest U.S. metros, the 17 with the largest home value declines from peak levels are in the West. However, owners in these areas should still have significant equity in their homes; home value appreciation since 2019 ranges from 26% in San Francisco to 65% in Austin.
- Total inventory is now 3% above levels a year ago, but remains 38% below that of 2019. Listings’ median time on the market rose from August and now stands at 19 days. That’s a more leisurely pace than last year’s 11 days on market, but much faster than in September 2019, when listings typically lasted a month.
- Now at 27.5% nationwide, the share of listings with a price cut is also rising — up from 18.3% in 2021 and September 2019’s rate of 22.3%. Among the top-100 largest metro areas, those with the largest share of price cuts are Boise (47.8%), Phoenix (45%), Ogden, Utah (44.4%), and Salt Lake City (43.9%).
- Zillow pegged typical rent at $2,084, with 10.8% annual growth in September, down from a record-breaking peak of 17.2% in February. Month-over-month growth has declined to a more normal rate of 0.3% — far from the peak of 2.2% seen in July 2021.
- But the share of renters’ income that goes toward housing has marched up, from 29% in September 2019 to 35% now. Since 2019, rents have risen the most in Miami (51.5%), Tampa (49.1%) and Phoenix (43.8%).
Major takeaway:
The report also found that the flow of new for-sale listings to the market remained anemic; an 11.4% drop from August was the third straight month of double-digit declines. Although the flow of new listings typically slows down at this time of year, the decline from this year’s spring peak is larger than in 2019. But even as demand has fallen off, tight supply could insulate the market from a significant price correction.
“The late-summer mortgage rate reprieve brought a short-lived surge of buyers back into the market, proving that many priced-out home shoppers are poised to buy when homeownership becomes more affordable,” said Jeff Tucker, senior economist at Zillow. “Unfortunately, shoppers this winter are more likely to contend with mortgage rates in the ballpark of 7%, making even this summer’s rising rates look modest by comparison. Still, as many rate-sensitive shoppers stay sidelined, those who forge ahead now will find more options and more eager sellers than anytime since the pandemic began.”
For the full report, click here.
