Zillow Group, the Seattle-based online real-estate marketplace company, is reporting in their March Zillow Real Estate Market Report that quickly rising mortgage rates continue to negatively impact affordability that has been brought on by record home value growth. As a result, monthly mortgage payments on a typical U.S. home are currently 19.5% higher than they were just 3-months ago and are 38% higher year-over-year. Nevertheless, the pace and volume of sales picked up in March, showing just how deep the pool of home buyers willing and able to meet current asking prices really is.
Zillow is reporting that inventory is 22.5% lower than it was a year ago. The estimated 754,000 homes that were on the market in March represent a figure lower than in any month on record before January 2022. The number of newly listed homes in March jumped 35.8% from February to about 386,000 but remains 8.5% lower than last March’s pace of new listings.
On the positive side, the typical U.S. home is worth 20.6% more than it was a year ago, the 12th straight month in which a new record for annual home value growth has been set. Mortgage rates, which sat below 3% a year ago, entered March at 3.51%—rising as high as 4.54% during the month.
Jeff Tucker, Zillow’s Senior Economist, said in a statement prepared to accompany the March report, “Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking. Record low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices climbed quickly. March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace, and the answer was ‘So far, yes.’ There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth, but for now, there is plenty of fuel in the tank as home shopping season kicks into gear.”
After six consecutive months of dwindling inventory—a streak that lasted longer into the year than is typical—11.6% more homes were available in March than in February, the largest one-month jump in Zillow’s records.
As a result of all of the latest information, Zillow has revised its home value forecast, which now calls for 14.9% growth through March 2023, down from a year-ahead forecast of 16.5% growth made in February. Zillow’s existing home sales forecast has been lowered as well, to 6.09 million sales in 2022, which would mark a slight decline of 0.5% from 2021.
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