More traditional seasonal growth may be taking hold again in America’s housing inventory, but full recovery remains a distant prospect.
The number of homes for sale rose 3 percent from May to June — the second consecutive month of growth according to Zillow Research.
Still, home inventory remained 42% lower than it was during the same time two years ago—a product of a market that has been unable to keep up with buyer demand amidst pandemic-era landscape changes. Rapid home value growth continues to be a hallmark amid these conditions as more potential buyers are drawn back into this depleted marketplace and new listings become even harder won against an increasing population looking for affordable entry level properties.
The market has been facing mounting housing affordability concerns and an overall challenging environment for buyers. However, conditions are slowly changing to bring balance into the market that will benefit both buyers and sellers.
Last year when this time came around there were more homes on the list than usual with a 4% growth in houses from May-June alone; however, as 2020 progressed we have seen less of those listings available which signaled better times ahead!
Home values hit record highs in June, up 2% from May’s levels and 15% higher year over year. Rent hikes also accelerated this month with rent prices increasing 7%. This spike is relatively recent as typical rents were around $1,700 a month before April of this year. By June the average rent nationwide had reached nearly $1,800 per month-the biggest increase seen in at least six years!
Home values skyrocketed to new heights last week when they increased by 2%, marking their highest level since records began being kept 20+ years ago (in 1997). Meanwhile renters are feeling squeezed as rental costs have been steadily rising for months across most markets-up 7% on an annual basis according to one report out today that predicts.
Zillow’s economists expect home values to continue increasing at a more modest scale this year, with the projection of 13% over the next 12 months. This is roughly 2-3 times lower than current levels seen in 2018.
In order for this prediction to hold true there will need be an influx in new inventory on Zillow’s website and other similar sites as we head into 2019; if not then prices may begin creeping back up closer towards pre-pandemic dynamics within 7-12 months from now.
The market may not see the abundance of inventory needed to balance supply and demand for a while. While more homes are being built, it could take years before there is enough new construction added on that will make much difference in prices.