SEATTLE, WA — February’s housing market failed to show the expected resurgence in activity, but recent drops in mortgage rates could stimulate buyer and seller interest in March, according to Zillow®.
Annual home value growth eased to 2.1%, the slowest pace in 18 months, providing some relief to buyers grappling with affordability challenges. Meanwhile, inventory levels climbed with 1.04 million homes on the market last month, marking the highest February inventory since 2020 and a 15% year-over-year increase.
“Affordability is still a massive challenge for those who have been waiting to buy a home, but the lower rates we’ve seen so far in March are taking the edge off,” said Skylar Olsen, Zillow chief economist. “Rate dips tend to energize buyers and sellers both; if they continue or hold, we should see more activity. Economic uncertainty is a counterbalance, 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.”
Mortgage rates, which dropped by roughly a quarter point in February and continued declining into March, are at their lowest level since December. This reduction could drive cost savings for buyers and encourage hesitant homeowners to list their properties.
Homes stayed on the market for an average of 23 days in February before going pending, six days longer than last year and closer to pre-pandemic levels. Slower competition among buyers is contributing to more balanced market conditions nationally. Zillow’s market heat index suggests neither buyers nor sellers currently hold a significant advantage, a trend not seen in February since 2019.
The cooling market has also affected newly pending sales, down nearly 8% compared to last year but still 10% above pre-pandemic norms. Sellers may take heart in Zillow’s research predicting they can command premiums on their sales through the summer months.
Zillow’s latest rental market report indicates a shift as multifamily rent growth outpaces single-family units for the first time since June 2024. This change is partly due to increased single-family home construction and a slowdown in apartment developments, exacerbating affordability issues in the rental market.
While uncertainty in the broader economy creates some hesitation, Zillow remains cautiously optimistic about the impact of lower mortgage rates in heating up the spring housing market.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.