What happened: The seasonally adjusted national S&P CoreLogic Case-Shiller Index (C-S) fell again in May. Released a month earlier, May home values measured by the Zillow Home Value Index (ZHVI) also fell on a seasonally adjusted basis – the first drop for any May since 2011. ZHVI has since shown continuing declines in June. Zillow now forecasts ZHVI to fall 2% in 2025.
What Zillow Senior Economist Orphe Divounguy thinks: According to Zillow data released last month, despite a return of sellers this home shopping season, sluggish sales led to a 20% increase in total for-sale inventory compared to the same month last year. As a result, the share of listings with a price cut shot up to the highest May rate since Zillow started tracking this metric. In May, home values were lower than a year ago in 22 of the 50 largest metro areas.
The latest data tells a similar story. There were 1.36 million homes for sale in June — the most since November 2019. June price cuts set a record as affordability hurdles persist. A record 26.6% of listings saw a price drop in June — the highest for any June since at least 2018.
While sales continue to bounce along the bottom, price adjustments could support a modest increase in sales over the coming year.