Sellers remain firmly in control of the U.S. housing market, with annual price growth reaching record highs and inventory continuing to fall. But while the market has remained strong well past the point at which it usually starts slowing down for the year, that slowdown may finally be on the horizon: Pending sales are falling off somewhat, and list prices are growing more slowly.
Pending sales slow, time-on-market stays steady
Newly pending listings were up 22.2% year-over-year, but fell 4.6% month-over-month and 1.5% week-over-week. Though the pandemic pushed the buying season back and demand is still high, buyers' scramble for homes may be calming somewhat.
Homes nationwide typically stayed on the market for 13 days before going pending, in line with levels experienced throughout much of August and September. The number of days homes typically spend on the market before going pending has consistently fallen since mid-May, and is now 15 days less than during the same week in 2019.
Inventory continues to spiral downward
The long decline in for-sale inventory continued for the 18th straight week, currently down 35% from 2019 levels. This represents the largest year-over-year drop in total inventory yet recorded in Zillow weekly data. Inventory was down 3.2% month over month.
New for-sale inventory was down 9.5% year over year and down 6.9% from the same point in the prior month. In late August, a brief surge of new listings almost brought numbers up to 2019 levels, but that pace dropped off again in September, contributing to the ever-deepening drought of overall active listings.
Prices keep climbing as sellers' market endures
As of the week of Aug. 15 (the latest date for which this data is available), median sale price was up 9.3% year over year to $284,625 — the largest annual jump since at least the start of 2019. Median sale price was up 1.2% month over month, a slower monthly pace than in each of the previous eight weeks.
Median list price rose to $345,000, 10.4% over last year's figures and — again — the largest year-over-year increase recorded in Zillow weekly data stretching through last year. But list prices rose a scant 0.1% month-over month, potentially indicating an overdue seasonal cooling of the market may finally be setting in.
Consumer confidence rises and unemployment claims fall
After two consecutive months of decline, the Conference Board's Consumer Confidence Index jumped 15.5 points from August to September, the strongest month-over-month gain since April 2003. Overall confidence is still 23% below February levels.
New unemployment claims fell by 36,000 last week but remained between 800,000 and 900,000 for the fifth straight week. Those collecting unemployment insurance through regular state programs fell by 980,000 to 11.8 million, which is the lowest level seen since March, but still far above the 1.7 million on unemployment at this time last year.
Housing market outlook improves, but lingering economic uncertainty tempers expectations
Sales expected to stay high but taper through 2021: Seasonally adjusted home sales are expected to peak this fall then gradually decline through 2021. Sales volumes overall are forecasted to remain higher than pre-pandemic levels throughout this year and next.
Home price outlook adjusted higher for coming year: Seasonally adjusted home prices are expected to increase 1.2% from August to November and rise 4.8% between August 2020 and August 2021. The previous forecast predicted a 3.8% increase in home prices over this time frame.
Here's why: The forecasts for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand. The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of economic uncertainty, including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market and virus-specific factors, were incorporated into this outlook.
The Zillow Weekly Market Reports are a weekly overview of the national and local real estate markets. The reports are compiled by Zillow Economic Research and data is aggregated from public sources and listing data on Zillow.com. New for-sale listings data reflect daily counts using a smoothed, seven-day trailing average. Total for-sale listings, newly pending sales, days to pending and median list price data reflect weekly counts using a smoothed, four-week trailing average. National newly pending sales trends are based upon aggregation of the 38 largest metro areas where historic pending listing data coverage is most statistically reliable, and excludes some metros due to upstream data coverage issues. For more information, visit www.zillow.com/research/.
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