Zillow Weekly Market Report (Through July 11) & June 2020 Data Summary
Pre-pandemic forecasts for a frantic home shopping season were put on ice in early spring. Fast-forward to early summer, and homes are flying off the market as heavy demand combines with limited inventory, helping median home values remain steady. But while the for-sale market continues to show resilience in the face of the pandemic, the rental market showed signs of a slowdown last month — a time when rent growth usually accelerates.
Home values continued their steady, upward trajectory in June
The typical U.S. home was worth $252,178 in June, up 4.3% year-over-year and 0.3% from May, according to the June Zillow Home Value Index.
Among the nation's 50 largest metro markets, annual home value growth was fastest in June in Phoenix (+9.6%) Birmingham (+7.6%) and Memphis (+7.5%). Chicago (+0.8% year over year) and San Francisco (+1.1%) recorded the slowest annual home value growth in June.
Annual home value growth in San Jose and Seattle, in particular, has turned around remarkably from a year ago. Last June, San Jose home values were falling 9.9% — a year later, they are growing at a 5% annual pace. In Seattle, the typical home value was down 0.7% year-over-year last June, but is now up 7.4% — fourth-fastest among large U.S. metros.
Rent growth slowed in June — at a time when it is typically accelerating
Typical monthly rent nationwide was $1,723 in June, up 1.5% from a year ago but down from 2% annual growth recorded in May, according to the June Zillow Observed Rent Index.
During the past five years, typical monthly U.S. rent has grown about $30 on average between March and June. This year, the typical U.S. rent has fallen $5 over that period, and is down by almost $60 in San Jose and New York.
Even so, rents are higher than a year ago in 43 of the top 50 metros, led by Memphis (+6% year over year), Phoenix (+5.1%) and Riverside (+4.6%).
Among large markets, typical rent fell this June compared to last June in San Jose (-1.2%), New York (-1%), San Francisco (-0.5%), Washington, D.C. (-0.2%), Baltimore (-0.2%), Houston (-0.1%) and Oklahoma City (-0.1%).
Small uptick in new listings not enough to keep up with demand
In the week ending July 11, new listings grew 2.1% from the previous week, a much-needed increase in a market starved for inventory.
Despite more new listings coming onto the market, total inventory still fell 1.1% from a week earlier, a sign that buyer demand is outpacing the flow of new listings.
Newly pending sales fall as lack of inventory takes its toll
Newly pending sales fell 6.3% week over week, and are now 9.4% lower than a month earlier.
Homes that were sold last week typically went under contract after just 19 days, a new record pace in Zillow data that dates back to 2018. This indicates recent dips in pending sales numbers are more due to a lack of inventory than fading buyer demand.
Median list price growth likely to be reflected in future sale prices
The median list price in the U.S. is $340,460. That's 4.8% higher than a year earlier, and up 2.3% month over month.
In the week ending May 30 — the most recent available data due to lags in reporting — the median sale price was $262,200, up 1.1% year over year. High-end listings surged in June while affordable listings fell off, part of the reason the median list price has grown, and that relatively greater share of expensive homes on the market is likely to drive up the median sale price in coming weeks.
Zillow's home price forecast improves, but pending sales forecast worsens slightly
Zillow's latest baseline forecast calls for home prices to fall just 0.5% from their June peak to August, followed by a rapid recovery, down from prior expectations (as of our May forecast) for a 1.8% decline by October from April.
We expect newly pending home sales volume to near (94%) pre-pandemic, February levels by December. Our earlier June forecast was for an almost-complete (99%) recovery by the end of the year, while our early May forecast called for December newly pending home sales to equal 91% of their February levels.
These changes to the forecast were made based on a combination of: A strong recovery in newly pending sales through mid-June, followed by a modest slowdown; a faster-than-expected economic recovery through June, and a more-pessimistic outlook for the latter half of the year; a continued collapse in inventory levels; and continued strength in the Zillow Home Value Index.
Methodology
The Zillow Weekly Market Reports are compiled by Zillow Economic Research and data is aggregated from public sources and listing data on Zillow.com. Newly pending sales and new for-sale listings data reflect daily counts using a smoothed, seven-day trailing average. Total for-sale listings, days to pending and median list price data reflect weekly counts using a smoothed, four-week trailing average.
Click here to read past editions of Zillow's Weekly Market Report.
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