Bouncing mortgage rates hinder buyers stressed
about affordability
- The typical home value fell 0.3% from July, the largest monthly
decrease since 2011.
- Competition for homes is strongest in affordable metros and
weakening fastest in expensive ones.
- Lack of competition among buyers has raised both inventory and
listings' time on the market.
SEATTLE, Sept. 19,
2022 /PRNewswire/ -- Home values slipped for the
second consecutive month as mortgage costs continue to sideline
buyers, according to Zillow®'s latest market report1.
Affordability is driving market momentum: Low-cost markets remain
competitive while prices drop the fastest in both the most
expensive markets and those that witnessed the strongest
appreciation during the pandemic.
In addition to affordability challenges, recent volatility in
mortgage rates is making it difficult for many borrowers to qualify
for a loan or even plan for their purchase.
"Substantial day-to-day and week-to-week rate movements mean
that many potential buyers are able to qualify for a loan one week,
but not the next, or vice versa," said Skylar Olsen, chief economist at Zillow. "Even
buyers able to afford a house at current rates could feel frozen,
waiting for mortgage rates to fall dramatically again, like they
did from the end of June to mid-July, when rates dropped 50 basis
points in just two weeks."
As the share of median household income needed to pay monthly
mortgage costs now stands beyond the 30% level considered to be a
financial burden, uncertainty itself could be holding up a large
population of buyers who could otherwise still afford to move
forward with a loan. It's likely that this problem will continue
until markets stabilize and return to some semblance of normalcy,
Olsen said.
The U.S. typical home value fell 0.3% from July to August and
now stands at $356,054, as measured
by the raw2 Zillow Home Value Index. That's the largest
monthly decline since 2011 and follows a 0.1% decrease in July.
Appreciation has receded since peaking in April, but typical home
values are still up 14.1% from a year ago and 43.8% since
August 2019, before the
pandemic.
Typical mortgage payments show an even starker picture of the
astronomical growth of expenses for new homeowners over the past
three years. The historic rise in home prices over the pandemic
combined with this year's spiking mortgage rates have pushed the
monthly mortgage payment on a newly-purchased typical home,
including insurance and taxes, from $897 in August 2019
to $1,643 – an 83% increase.
Reduced competition has homes lingering on the market. Typical
time before a listing goes pending is now 16 days3,
three days more than in July — a steeper increase than the market
usually sees this time of year — and up from an all-time low of six
days in April.
Inventory ticked up, rising 1% from July. But that's by far the
smallest monthly increase since February. A significant decline in
the flow of new listings to the market over the past two months
indicates that the slight rise in total inventory is the result of
homes taking longer to sell, rather than extra selling activity.
Mortgage rates hovering around 6% are likely dissuading many owners
from selling their current homes and entering the market as
buyers.
Affordable markets in the Midwest are generally retaining their
heat while competition is cooling most rapidly in Western markets,
especially those that either cost the most or saw the most extreme
appreciation over the pandemic.
Home values rose from July to August in 12 of the 50 largest
U.S. markets, led by Birmingham
(0.9%), Indianapolis (0.5%),
Cincinnati (0.4%) and Louisville (0.2%). Those four all have a
typical home value well under $300,000. Miami,
in the fifth spot, breaks the trend here, but also features the
highest rent growth over the past three years by far, which could
be stoking demand for purchases.
Values fell the furthest month over month in San Francisco (-3.4%), Los Angeles (-3.4%), Sacramento (-3.2%) and Salt Lake City (-2.6%).
Listings' time to pending saw similar trends, decreasing since
July by one day in Milwaukee and
staying steady in St. Louis,
Cincinnati, Columbus and Louisville. Markets with the largest increase
were Las Vegas by 11 days,
Austin (10), Phoenix (8) and Riverside (7).
Sellers appear to be coming to grips with the new market
paradigm. The share of listings with a price cut rose by just one
percentage point since July, compared with much steeper hikes in
previous months.
Roughly 28% of listings nationally received a price cut —
slightly higher than August 2019's rate of 22%. The share of
listings with a price cut is highest in Salt Lake City, Phoenix, Las
Vegas and Austin. Markets
with the lowest rates for price cuts are Milwaukee, New
York, Hartford and
Boston.
Rent growth continued to ease in August, with typical rent of
$2,090 now 12.3% above that of last
August — down from a peak of 17.2% annual growth in February.
Annual rent growth is strongest in Miami (21.9%), New
York (17.9%), Orlando
(17.5%) and San Diego
(17.1%).
Metropolitan
Area*
|
August Zillow Home
Value Index (ZHVI) (Raw)
|
August ZHVI
Year-Over-Year Change (Raw)
|
August ZHVI Month-
Over- Month Change (Raw)
|
Typical Days on
Market (Raw)
|
Share of Listings
With a Price Cut (Raw)
|
Zillow Observed Rent
Index (ZORI)
|
Zillow Observed Rent
Index Year-Over-Year Change
|
United
States
|
$356,054
|
14.1 %
|
-0.3 %
|
16
|
27.6 %
|
$2,090
|
12.3 %
|
New York, NY
|
$620,146
|
9.2 %
|
-0.2 %
|
31
|
15.7 %
|
$3,342
|
17.9 %
|
Los Angeles,
CA
|
$897,864
|
6.8 %
|
-3.4 %
|
23
|
26.0 %
|
$3,024
|
12.2 %
|
Chicago, IL
|
$312,487
|
9.4 %
|
-0.5 %
|
17
|
29.1 %
|
$1,979
|
9.2 %
|
Dallas–Fort Worth,
TX
|
$391,567
|
19.0 %
|
-1.4 %
|
15
|
36.1 %
|
$1,882
|
13.5 %
|
Philadelphia,
PA
|
$338,914
|
9.8 %
|
-0.2 %
|
13
|
23.6 %
|
$1,869
|
9.3 %
|
Houston, TX
|
$312,579
|
15.3 %
|
-0.5 %
|
18
|
31.3 %
|
$1,633
|
7.6 %
|
Washington,
DC
|
$551,504
|
6.2 %
|
-0.6 %
|
14
|
27.9 %
|
$2,336
|
8.5 %
|
Miami–Fort Lauderdale,
FL
|
$474,291
|
28.2 %
|
0.2 %
|
21
|
21.4 %
|
$2,910
|
21.9 %
|
Atlanta, GA
|
$383,035
|
20.3 %
|
-0.3 %
|
16
|
31.2 %
|
$2,020
|
11.1 %
|
Boston, MA
|
$654,482
|
8.6 %
|
-0.9 %
|
11
|
20.0 %
|
$2,910
|
10.9 %
|
San Francisco,
CA
|
$1,388,170
|
3.0 %
|
-3.4 %
|
22
|
25.1 %
|
$3,331
|
6.9 %
|
Detroit, MI
|
$239,990
|
7.3 %
|
-0.9 %
|
13
|
28.9 %
|
$1,481
|
8.8 %
|
Riverside,
CA
|
$575,434
|
11.0 %
|
-0.7 %
|
27
|
29.8 %
|
$2,666
|
10.1 %
|
Phoenix, AZ
|
$463,902
|
12.1 %
|
-1.5 %
|
29
|
43.1 %
|
$1,968
|
9.3 %
|
Seattle, WA
|
$758,170
|
10.1 %
|
-2.6 %
|
|
34.5 %
|
$2,382
|
10.4 %
|
Minneapolis–St. Paul,
MN
|
$372,261
|
6.0 %
|
-1.0 %
|
19
|
27.7 %
|
$1,683
|
5.0 %
|
San Diego,
CA
|
$886,147
|
9.9 %
|
-0.9 %
|
21
|
33.1 %
|
$3,190
|
17.1 %
|
St. Louis,
MO
|
$244,361
|
10.1 %
|
0.0 %
|
6
|
25.2 %
|
$1,328
|
11.0 %
|
Tampa, FL
|
$391,497
|
26.4 %
|
0.0 %
|
15
|
37.0 %
|
$2,166
|
15.2 %
|
Baltimore,
MD
|
$378,396
|
8.0 %
|
-0.1 %
|
11
|
26.9 %
|
$1,830
|
5.7 %
|
Denver, CO
|
$624,226
|
10.4 %
|
-1.1 %
|
|
38.8 %
|
$2,058
|
8.7 %
|
Pittsburgh,
PA
|
$209,583
|
4.0 %
|
-1.1 %
|
15
|
28.8 %
|
$1,386
|
8.3 %
|
Portland, OR
|
$565,117
|
6.7 %
|
-1.5 %
|
18
|
33.2 %
|
$1,977
|
9.8 %
|
Charlotte,
NC
|
$390,203
|
21.8 %
|
-0.1 %
|
11
|
33.6 %
|
$1,866
|
14.4 %
|
Sacramento,
CA
|
$591,777
|
4.6 %
|
-3.2 %
|
21
|
37.4 %
|
$2,348
|
7.0 %
|
San Antonio,
TX
|
$339,620
|
16.4 %
|
-0.1 %
|
17
|
33.9 %
|
$1,527
|
10.1 %
|
Orlando, FL
|
$402,774
|
26.6 %
|
0.0 %
|
14
|
31.9 %
|
$2,124
|
17.5 %
|
Cincinnati,
OH
|
$263,460
|
11.3 %
|
0.4 %
|
5
|
26.7 %
|
$1,501
|
12.8 %
|
Cleveland,
OH
|
$221,716
|
11.2 %
|
0.1 %
|
8
|
26.6 %
|
$1,393
|
9.1 %
|
Kansas City,
MO
|
$287,917
|
11.6 %
|
-0.1 %
|
7
|
26.9 %
|
$1,399
|
10.7 %
|
Las Vegas,
NV
|
$443,694
|
16.9 %
|
-1.5 %
|
27
|
41.9 %
|
$1,892
|
8.1 %
|
Columbus, OH
|
$304,089
|
13.9 %
|
0.1 %
|
5
|
27.1 %
|
$1,525
|
11.1 %
|
Indianapolis,
IN
|
$273,959
|
16.7 %
|
0.5 %
|
7
|
30.5 %
|
$1,555
|
12.3 %
|
San Jose, CA
|
$1,526,889
|
1.8 %
|
-2.1 %
|
22
|
25.2 %
|
$3,456
|
10.6 %
|
Austin, TX
|
$558,516
|
7.4 %
|
-1.4 %
|
37
|
38.9 %
|
$1,961
|
10.8 %
|
Virginia Beach,
VA
|
$331,650
|
11.6 %
|
0.0 %
|
21
|
20.8 %
|
$1,662
|
7.2 %
|
Nashville,
TN
|
$455,735
|
24.1 %
|
-1.0 %
|
15
|
37.5 %
|
$1,927
|
13.4 %
|
Providence,
RI
|
$450,619
|
9.8 %
|
-0.5 %
|
13
|
21.2 %
|
$1,975
|
11.9 %
|
Milwaukee,
WI
|
$270,624
|
7.2 %
|
-0.3 %
|
26
|
15.3 %
|
$1,246
|
7.8 %
|
Jacksonville,
FL
|
$379,070
|
25.4 %
|
0.0 %
|
18
|
37.3 %
|
$1,824
|
12.1 %
|
Memphis, TN
|
$235,102
|
17.4 %
|
-0.2 %
|
19
|
22.4 %
|
$1,563
|
10.5 %
|
Oklahoma City,
OK
|
$220,247
|
14.9 %
|
0.1 %
|
8
|
28.5 %
|
$1,374
|
8.3 %
|
Louisville,
KY
|
$243,051
|
10.9 %
|
0.2 %
|
7
|
29.7 %
|
$1,335
|
12.8 %
|
Hartford, CT
|
$324,379
|
10.7 %
|
0.0 %
|
10
|
19.7 %
|
$1,738
|
9.6 %
|
Richmond, VA
|
$338,835
|
12.8 %
|
0.0 %
|
7
|
23.2 %
|
$1,669
|
11.9 %
|
New Orleans,
LA
|
$272,218
|
10.9 %
|
-0.1 %
|
17
|
31.5 %
|
$1,548
|
13.2 %
|
Buffalo, NY
|
$247,057
|
9.0 %
|
-1.0 %
|
12
|
20.5 %
|
$1,292
|
10.0 %
|
Raleigh, NC
|
$451,607
|
20.3 %
|
-1.1 %
|
12
|
35.8 %
|
$1,837
|
12.6 %
|
Birmingham,
AL
|
$249,543
|
14.1 %
|
0.9 %
|
10
|
25.9 %
|
$1,388
|
9.2 %
|
Salt Lake City,
UT
|
$580,717
|
7.9 %
|
-2.6 %
|
17
|
43.2 %
|
$1,758
|
13.7 %
|
*Table ordered by
market size
|
1 The Zillow Real Estate Market Report is a
monthly overview of the national and local real estate markets. The
reports are compiled by Zillow Research. For more information,
visit www.zillow.com/research.
2 Home value figures in the August 2022 Zillow market report represent the
raw version of the Zillow Home Value Index. Zillow Research has
chosen to present the raw version during this period of
unparalleled volatility. The full series of all ZHVI versions,
including geographic cuts down to the ZIP code level, are available
for download at https://www.zillow.com/research/data/.
3 Raw median days to pending. A smoothed (3-month moving
average) version of this metric appeared in previous market
reports.
About Zillow
Group
Zillow Group, Inc. (NASDAQ: Z) and (NASDAQ: ZG) is reimagining
real estate to make it easier to unlock life's next chapter. As the
most visited real estate website in the
United States, Zillow® and its affiliates offer customers an
on-demand experience for selling, buying, renting or financing with
transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®,
Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing
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