New Listing Improvement Held in October, Helping to Cool Competition (October 2023 Market Report)
Mortgage rates that ascended to 23-year highs in October didn’t have as big an impact on housing demand as might be expected. Persistently high rates also may have convinced homeowners on the fence to go ahead with a sale, as new listings have nearly escaped the red on an annual basis, and are generally trending out of a rate lock-induced hole.
A mortgage rate hike to just below 8% brought monthly mortgage payments up by 4% from September to October. At $1,991, monthly payments are nearly 10% higher than last October and have nearly doubled in two years.
Home value growth decelerated in October, but remains positive year over year. Monthly appreciation slowed from a 0.1% decline in September to a 0.3% step down in October; cooling slightly faster than pre-pandemic seasonal norms. Zillow’s Home Value Index is up 2.3% year over year, now standing at $347,972.
The longstanding deficit in new listings is generally shrinking as sellers accept that higher rates are sticking around. A shortfall of 19% compared to pre-pandemic norms is much improved from a trough of 35% in April. Relatively more listings hitting the market is contributing to a cooler feel, with more options to spread out demand among interested buyers.
While competition is easing, as it typically does this time of year, inventory still far below pre-pandemic norms is keeping attractive listings moving at a rapid pace. A record number of households in prime home-buying ages means there are still buyers in this market, despite the headwinds.
Home values are falling in most of the U.S. as mortgage rates at 23-year highs and the usual seasonal housing cooldown take their toll
- Home values fell in October in most large markets, led by Austin (-1.5%), Minneapolis (-1%) and New Orleans (-1%).
- Home values continue to rise month over month in only 10 of the 50 largest U.S. metro areas. Miami leads the way (+0.5%), followed by San Jose (+0.4%) and San Diego (+0.2%).
- On an annual basis, home values are up in 34 of the 50 largest markets. That’s up from 32 markets that had seen annual home value gains as of September.
- Home values are up the most since last October in Hartford (+11.4%), Milwaukee (+8.5%), Providence (+7%) and Boston (+6.8%).
- Austin (-9.2%) and New Orleans (-9%) have seen the biggest home value drops over the past year.
New listings are trending up compared to pre-pandemic norms
- Fewer new listings are hitting the market, which is typical for this time of year. Nationally, new listings fell 4.7% from September. New listings fell from September in 46 of the 50 largest markets. There were fewer new listings than last October in 40 of the 50 largest markets.
- However, a shortfall of only 1.2% compared to the year prior is the smallest since May 2022. And a deficit of 19% compared to pre-pandemic norms is much improved from a trough of 35% in April.
Total inventory is climbing, likely a result of fewer sales taking homes off of the market
- Despite fewer homes newly listed for sale, total inventory climbed 2.6% nationally.
- Newly pending sales fell 3.3% from September to October.
- Inventory rose month over month in 42 of the 50 largest markets, none more so than Phoenix (+9%), Miami (+8.5%) and Tampa (+8.3%).
- Inventory fell the most from October in Seattle (-6.6%), Portland (-3.1%), Austin (-2.4%) and San Jose (-1.6%).
- Sales activity is rising fastest in Memphis (+9.4% month over month), Atlanta (+5.8%) and the New York City metro area (+5.3%).
- Sales slowed the most in New Orleans (-14% month over month), Seattle (-12.1%) and Sacramento (-11.8%).
As home shopping season fades into the rearview and competition continues to cool, fewer buyers are having to contend with bidding wars and more sellers are cutting their list price
- The share of homes sold above list in September — often indicating a bidding war between multiple interested buyers — fell to 34%. That’s 2.9 percentage points below the previous month.
- Above-list sales fell from August to September in 43 of the 50 largest markets.
- In October, 25.2% of sellers cut their list price, up from 23.9% in September.
- The share of listings with a price cut rose from September to October in 47 of the 50 largest markets.
Rent growth finally accelerated after a nearly two-year slowdown
- Annual rent growth ticked up in October for the first time since the pandemic peak in February 2022.
- The typical U.S. rent is $2,011. That is 3.2% higher than a year ago, up slightly from September’s annual change.
- Smaller, more affordable markets in the Northeast and Midwest saw annual rent growth remain the strongest in October. Typical asking rent has fallen from a year ago in Austin, San Francisco and Portland.
Read more about the rental market in Zillow’s October 2023 Rental Market Report.