Slow Competition Among Buyers Flattens Out Home Value Appreciation (February Market Report)
Buyers and sellers didn’t jump back into the housing market as expected in February, but lower mortgage rates should encourage them in March.
Mortgage rates fell by about a quarter of a point over the course of February and have staggered further downward in March, now reaching lows not seen since December. Mortgage rates have enough of an impact on monthly payments to provide significant cost savings for prospective buyers and should help entice some fence-sitting homeowners to list their properties.
Aside from costs, buyers are gaining a leg up in a few areas of the market. For one, they’ll see more options when they start shopping — 1.04 million homes were on the market last month, more than in any February since 2020, and 15% more than last year. That’s despite a nearly 5% slowdown from last year in the flow of new listings to the market.
Affordability continues to present a challenge for those who have been waiting to buy a home, but the lower rates we’ve seen so far in March are steadily slicing off portions of monthly mortgage payments. That, combined with flatter home value growth and wage growth that outpaces rent growth means that some long-time savers are likely catching up to a down payment that may have felt out-of-grasp for years.
Rate dips tend to energize buyers and sellers both. We saw evidence of this in August and September. If they continue or hold, we should see more activity.
But economic uncertainty is providing a counterbalance right now, one that will be felt in some areas of the country more than others. People tend to shelter in place when the future of their job or industry is uncertain.
With more homes for sale, competition among buyers is slower, too. Listings are spending about 23 days on the market before a sale is pending. That’s six more days than last year and just four fewer than at this time pre-pandemic — closer to “normal” than at any time since 2020.
Slowing competition means slower growth in home values. Typical home values are up 2.1% year over year, the slowest growth seen in 18 months.
Newly pending listings fell by nearly 8% compared to the prior year, but still stand about 10% above pre-pandemic norms, nationally. Sellers nationwide should expect to fetch premiums on their sale from now through the end of July, according to Zillow research.
Neither buyers nor sellers have a clear advantage in negotiations at the national level, according to Zillow’s market heat index — a throwback for this time of year. The last year that happened in February was 2019.
February 2025 Market Report
Home values
- The typical U.S. home value is $357,377.
- The typical monthly mortgage payment, assuming 20% down, is $1,871.
- Home values climbed month over month in 16 of the 50 largest metro areas in February. Gains were biggest in San Jose (1.1%), San Francisco (0.5%), Seattle (0.4%), Los Angeles (0.4%), and San Diego (0.3%).
- Home values fell, on a monthly basis, in 23 major metro areas. The largest monthly drops were in New Orleans (-0.7%), Tampa (-0.7%), Jacksonville (-0.4%), Miami (-0.4%), and Phoenix (-0.4%).
- Home values are up from year-ago levels in 37 of the 50 largest metro areas. Annual price gains are highest in San Jose (7.6%), Providence (6.5%), Cleveland (6.2%), Hartford (5.6%), and New York (5.6%).
- Home values are down from year-ago levels in 11 major metro areas. The largest drops were in Austin (-3.8%), Tampa (-3.6%), San Antonio (-2%), New Orleans (-1.7%), and Phoenix (-1.6%).
- The typical mortgage payment is up 3.3% from last year and has increased by 113.1% since pre-pandemic.
Inventory and new listings
- New listings increased by 2.8% month over month in February.
- New listings decreased by 4.7% this month compared to last year.
- New listings are -21.1% lower than pre-pandemic levels.
- Total inventory (the number of listings active at any time during the month) in February increased by 1.4% from last month.
- The median age of inventory, the typical time since the initial list date for active for-sale listings, was 65 days.
- There were 15.4% more listings active in February compared to last year.
- Inventory levels are -25.8% lower than pre-pandemic levels for the month.
Price cuts and share sold above list
- 21.6% of listings in February had a price cut. That is down 1.1ppts month over month.
- There are 1.6ppts [more/fewer] listings with a price cut compared to last year.
- 22.3% of homes sold above their list price last month. That is down 2.5ppts month over month.
- -1.9ppts [more/fewer] homes sold above their list price compared to last year.
Newly pending sales
- Newly pending listings increased by 9.1% in February from the prior month.
- Newly pending listings decreased by 7.9% from last year.
- Median days to pending, the typical time since initial list date for homes that went under contract in a month, is at 23 days in February, down 15 days since last month.
- Median days to pending increased by 6 days from last year.
Market heat index
- Zillow’s market heat index shows the nation is currently a neutral market.
- The strongest sellers markets in the country are Buffalo, San Jose, San Francisco, Hartford, and Boston.
- The strongest buyers markets in the country are Miami, New Orleans, Jacksonville, and Tampa.
Rents
- Asking rents increased by 0.4% month over month in February. The pre-pandemic average for this time of year is 0.3%.
- Rents are now up 3.5% from last year.
- Rents fell, on a monthly basis, in 2 major metro areas. The largest monthly drops are in Cincinnati (-0.3%), Buffalo (-0.2%), Jacksonville (0%), Sacramento (0%), and St. Louis (0%).
- Rents are up from year-ago levels in 47 of the 50 largest metro areas. Annual rent increases are highest in Hartford (7.8%), Cleveland (6.3%), Providence (6.3%), Chicago (5.7%), and Milwaukee (5.5%).