SEATTLE, WA — Texas and Florida metros are emerging as top contenders for homebuyers, securing seven of the top 10 spots in Zillow’s new market heat index. However, the broader U.S. market continues to favor sellers, according to the latest report from Zillow.
“Prospective buyers in most markets today are feeling less intense competition than in recent spring shopping seasons,” said Skylar Olsen, Zillow’s chief economist. “Pressure is easing up as mortgage rates raise costs and sellers return. However, the pool of homes for sale remains remarkably low. This means the nation remains a seller’s market despite high mortgage rates — homes are selling faster, with more buyer interest over any one listing, than pre-pandemic.”
Strong construction in Texas and Florida has restored inventory levels, easing competition. Austin and San Antonio stand out with more inventory now than before the pandemic, while Tampa, Orlando, and Jacksonville show among the smallest deficits.
In contrast, Buffalo, New York, is the top market for sellers, forecasted by Zillow as the hottest market of 2024. Other strong seller markets include expensive coastal tech hubs, relatively affordable spillover markets in the Northeast like Hartford and Providence, and hot Upper Midwest metros such as Milwaukee and Minneapolis.
Zillow’s market heat index visually represents the urgency of buyers or the confidence of sellers in an area, showing changes over time. It considers the share of homes that sell quickly, the share of homes with price cuts, and buyer engagement with active Zillow listings.
Springtime Competition Eases as Costs and Inventory Rise
Both inventory and new listings posted solid gains, both monthly and compared to last year. Inventory rose 6.4% from March to April and climbed 18% over the previous year, marking the second-largest annual increase since at least 2019. New listings also grew nearly 11% month over month and 16% year over year. Despite these increases, total inventory remains 36% below pre-pandemic norms.
Mortgage rates, which spiked above 7% for the first time this year, along with new inventory, have held competition steady during a season when it typically intensifies.
U.S. home values grew 1.2% from March to April and are 4.4% higher than a year ago, showing a slight slowdown from last month’s 4.6% annual growth. The typical U.S. home is now worth $359,402.
The share of listings with a price cut reached 22.4% in April, the highest rate for April in the past six years and a notable increase from 17.2% last year. Price cuts can signal weakening demand, hinting at softer price growth ahead. Alternatively, they can reflect a market where sellers and agents are adjusting pricing strategies due to rapidly changing conditions and fewer comparable recent sales.
Homes that sold in April did so in an average of 13 days, which is fast by historical standards. However, this is three days slower than last April, marking the first time since June 2023 that the speed of sales lagged behind the previous year’s pace.
Why This Matters
Understanding these market dynamics is crucial for both buyers and sellers. For buyers, markets with rising inventory and slower sales could offer opportunities to negotiate better deals, especially in states like Texas and Florida, where construction has bolstered supply. Sellers in hot markets like Buffalo may continue to benefit from strong demand and limited competition.
For the broader economy, these trends highlight ongoing shifts in the housing market. High mortgage rates and fluctuating inventory levels reflect broader economic conditions, including inflationary pressures and supply chain disruptions. These factors influence consumer behavior and can impact everything from construction activity to retail spending.
In summary, while Texas and Florida present promising opportunities for buyers, the national market still leans towards sellers. Monitoring these trends can help stakeholders navigate the evolving real estate landscape effectively.
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