Zillow Research

Buyers Markets Spread From the South as Inventory Recovers (October 2024 Market Report)

Home buyers are gaining leverage in negotiations across the U.S. as competition over homes eased in October. Zillow’s market heat index shows competition nationwide remains in neutral, balanced territory, but is creeping closer to becoming a buyers market as the shopping season winds down. 

Mortgage rates that bounced up again from September lows and climbed back toward 7% in October are a major reason why competition among buyers is falling, along with the normal seasonal cooling of the housing market. But inventory that continues to recover from a pandemic-era deficit is another big contributing factor. 

Unlike mortgage rates and holiday-style seasonality, which tend to be less regionally-focused, both seasonal inventory trends and the recovery of inventory from record lows during the pandemic are local. For example, the moving decisions of buyers and sellers may not be as hampered by winter weather in Southern states. Even more of a differentiator is the inventory recovery in the South and select other areas that helped push the scales of competition in favor of buyers by leaps and bounds for many major metro areas there – most prominently in Texas, Florida, and New Orleans. 

But Zillow’s latest market report shows buyers even further afield are enjoying some time in the driver’s seat. Pittsburgh and Louisville joined 11 other major metros where buyers have an edge over sellers in negotiations in October. That comes on the heels of Indianapolis, Nashville and Atlanta becoming buyers markets in September. 

With today’s persistently high home prices and mortgage environment, competition between buyers has a lot to do with available inventory. All of 13 major markets where buyers currently have an edge are among the top-20 nationwide in terms of inventory recovery compared to pre-pandemic. 

In turn, that reduced competition translates to softer home value appreciation. Monthly drops in home values are the largest in Austin, Dallas, Atlanta, Tampa and San Antonio. 

New construction is another piece of the puzzle here. Where builders have been better able to keep up with housing demand, balance is returning to markets sooner and affordability — down payment and rent affordability in particular — is improving.

Mortgage rate relief in September short-lived

Relief that home buyers felt in September from a dip in mortgage rates was short-lived. Rates ticked back up in October, giving back some affordability gains. Mortgage payments on a typical home purchase rose 2.8% month-over-month in October, after falling for four consecutive months. Still, monthly mortgage payments (using a 20% down payment) are down more than $100 per month compared to the peak in May and are $179 less than October of last year. 

Home values

Inventory and new listings

Price cuts and share sold above list

Newly pending sales and days to pending

Market heat index

Rents

 

 

About the author

Skylar is the Chief Economist of Zillow.
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