Home sales are ticking up and price declines are leveling off as buyers are ready for the spring sales season. But sellers have yet to join the fray — the number of homes for sale is the second-lowest on record — meaning stiff competition for well-priced homes, according to the latest Zillow® market report1. What mortgage rates do next will have a huge impact on the market’s momentum.

“Now as a buyer, you can slow down, have your inspection and make a strong, well-informed offer,” said Ryan Platzke, Realtor at Helgeson/Platzke Real Estate Group and member of Zillow’s Premier Agent program in Minneapolis in a news release. “And as a seller, you are still in a very good position; you won’t see the 10 offers all cash, noncontingent, etc. But you will see one, maybe three offers, usually that first or second weekend, where you’ll be able to select which one to go forward with and comfortably make a decision.”

The typical U.S. home value was nearly flat from December to January, slipping just 0.1% and resting at $329,542, or 4.1% below the peak value set in July 2022. Despite the recent drop, it remains 6.2% higher than a year ago and 39% higher than before the pandemic.

Buyers Returning, but Potential Sellers Opt-out

The number of people buying homes has ticked up since the fall and is looking like a normal, pre-pandemic January. At a low point in November, newly pending listings were down 38% compared to one year earlier. In January, they were only down 20% from the previous year and were right in line with 2020.

Previously priced-out buyers were likely encouraged by mortgage rates that fell from a peak of 7.08% in November to 6.09% by Feb. 22 before ticking back up. This dramatically improved shoppers’ ability to buy. A new mortgage for a typical home using a 5% down payment cost $2,310 in October; that fell to $2,100 by the end of January. But conditions are still far more challenging than they were before the pandemic — in January 2020, a monthly payment was $1,127.

But while buyers are returning to the market, homeowners are opting not to list their homes. The 230,000 new listings in January were by far the lowest total in Zillow records that began in 2018; 17% fewer than the then-record low of January 2022 and 30% lower than the 2018–2021 average of about 330,000.

The 825,000 homes on the market in January was the second-lowest total in several years, and about 450,000 fewer than were ever on the market in January 2020.

This means competition for well-priced houses is stronger than before the pandemic, but don’t expect the widespread bidding wars of 2021 and early 2022.

It took a median of 31 days for a home to sell in January, indicating that buyer competition for attractive listings is livelier than pre-pandemic norms (more than 40 days to pending), but not as furious as in 2022 (nine days to pending) or 2021 (17 days to pending).

Will Sellers Return?

In the first two weeks of February, mortgage rates shot up by as much as 0.75 of a percentage point, proving that no one can count on a consistent downward trajectory for rates this year. Continued rate hikes would stunt supply as well as demand. Homeowners with very low mortgage rates will be reluctant to sell and have to buy another home with a much higher rate. Meanwhile, buyers are already straining their budgets to get into a mortgage. Sellers waiting for peak demand to get the best price for their listing may find few buyers able to afford it.

“The risk for sellers waiting till April or May to list is that no one knows what mortgage rates will do in the meantime,” said Zillow senior economist Jeff Tucker. “Buyers may return to hibernation if last month’s mortgage-rate thaw turned out to be a false spring.”

This is the first monthly market report that refers to the newly launched version of the Zillow Home Value Index (ZHVI), now based on the neural network-driven Zestimates formula that Zillow produces for nearly every home in the United States. The new ZHVI, like the neural Zestimate, now better reflects seasonal changes; prices tend to trend up in the spring and down in the fall and winter.

Metropolitan
Area*

January
Zillow
Home
Value Index (ZHVI)
(Raw)

ZHVI
Change,
Year
over
Year
(YoY)

ZHVI
Change,
Month
over
Month

Monthly
Mortgage
Cost (at
20%
Down)

Monthly
Mortgage
Cost
Change,
YoY

Total
Inventory
Change
Since
January 2020

Median
Days
on
Market
Change,
YoY

United States

$329,542

6.2 %

-0.1 %

$1,595

45.8 %

-35.7 %

22

New York, NY

$574,074

4.1 %

0.7 %

$2,770

40.6 %

-42.9 %

7

Los Angeles,
CA

$841,462

0.1 %

-0.7 %

$4,151

39.4 %

-27.8 %

23

Chicago, IL

$289,469

3.7 %

0.6 %

$1,391

40.2 %

-45.8 %

13

Dallas–Fort
Worth, TX

$359,743

4.5 %

-0.7 %

$1,752

45.8 %

-35.0 %

19

Philadelphia, PA

$323,974

7.0 %

0.4 %

$1,561

45.4 %

-35.6 %

6

Houston, TX

$295,108

5.3 %

-0.7 %

$1,436

45.9 %

-25.3 %

29

Washington, DC

$521,347

1.8 %

0.0 %

$2,529

38.6 %

-28.8 %

10

Miami–Fort Lauderdale, FL

$442,044

12.8 %

-0.2 %

$2,141

55.6 %

-37.4 %

22

Atlanta, GA

$357,312

6.1 %

-0.4 %

$1,735

47.5 %

-32.8 %

29

Boston, MA

$607,115

3.4 %

-0.3 %

$2,941

41.5 %

-30.7 %

7

San
Francisco, CA

$1,087,239

-4.9 %

-0.4 %

$5,318

32.1 %

0.0 %

23

Detroit, MI

$228,249

5.4 %

0.4 %

$1,097

43.0 %

-29.4 %

18

Riverside, CA

$531,416

2.5 %

-0.9 %

$2,607

42.6 %

-28.7 %

39

Phoenix, AZ

$429,775

0.3 %

-0.6 %

$2,105

39.0 %

2.8 %

49

Seattle, WA

$688,312

-0.8 %

-0.2 %

$3,346

38.0 %

4.7 %

32

Minneapolis–
St. Paul, MN

$349,472

1.6 %

-0.5 %

$1,691

38.5 %

-38.9 %

31

San Diego, CA

$816,218

1.1 %

-0.6 %

$3,989

41.1 %

-37.7 %

25

St. Louis, MO

$225,793

6.5 %

0.4 %

$1,086

44.8 %

-48.2 %

4

Tampa, FL

$360,578

8.2 %

-0.5 %

$1,751

50.7 %

-17.0 %

27

Baltimore,
MD

$352,931

4.0 %

0.9 %

$1,694

40.0 %

-43.9 %

8

Denver, CO

$568,272

-0.2 %

-0.1 %

$2,766

37.6 %

-18.8 %

24

Pittsburgh,
PA

$194,489

3.7 %

0.2 %

$937

41.0 %

-32.9 %

15

Portland, OR

$523,272

-0.2 %

-0.5 %

$2,544

37.1 %

-20.1 %

30

Charlotte, NC

$354,977

6.4 %

-0.5 %

$1,725

47.6 %

-14.9 %

20

Sacramento,
CA

$538,042

-2.6 %

-1.2 %

$2,636

35.1 %

-23.8 %

29

San Antonio,
TX

$287,206

5.3 %

-0.2 %

$1,393

45.1 %

-11.2 %

36

Orlando, FL

$372,553

8.4 %

-0.8 %

$1,814

51.0 %

-18.5 %

29

Cincinnati,
OH

$252,129

6.1 %

0.0 %

$1,215

44.7 %

-36.4 %

5

Cleveland, OH

$203,357

7.8 %

0.0 %

$979

46.5 %

-45.9 %

9

Kansas City,
MO

$276,889

7.1 %

0.4 %

$1,333

45.7 %

-42.7 %

7

Las Vegas, NV

$391,393

0.5 %

-1.2 %

$1,922

40.2 %

-11.9 %

52

Columbus,
OH

$285,648

7.8 %

0.0 %

$1,379

47.9 %

-34.0 %

4

Indianapolis,
IN

$257,620

5.4 %

-0.6 %

$1,246

45.0 %

-22.7 %

San Jose, CA

$1,358,777

-2.3 %

-1.1 %

$6,722

38.4 %

-17.4 %

20

Austin, TX

$476,581

-1.1 %

-1.0 %

$2,337

39.1 %

29.1 %

50

Virginia
Beach, VA

$316,156

5.3 %

0.3 %

$1,525

42.9 %

-46.2 %

11

Nashville, TN

$420,948

6.4 %

-0.1 %

$2,042

47.8 %

-18.0 %

35

Providence,
RI

$424,480

7.0 %

0.2 %

$2,048

46.0 %

-58.6 %

10

Milwaukee,
WI

$291,841

6.3 %

0.7 %

$1,398

42.7 %

-3

Jacksonville,
FL

$348,667

9.3 %

-0.9 %

$1,697

52.7 %

-13.5 %

Memphis, TN

$226,846

7.4 %

0.0 %

$1,096

47.6 %

-20.2 %

14

Oklahoma
City, OK

$213,342

8.3 %

-0.9 %

$1,035

49.0 %

-23.4 %

14

Louisville, KY

$238,520

5.2 %

0.3 %

$1,149

42.9 %

-33.9 %

8

Hartford, CT

$309,788

8.6 %

0.0 %

$1,494

48.2 %

-66.9 %

2

Richmond, VA

$334,158

8.6 %

0.2 %

$1,612

48.2 %

-46.9 %

4

New Orleans,
LA

$240,717

0.6 %

1.7 %

$1,154

34.0 %

31.4 %

36

Buffalo, NY

$234,092

6.3 %

-0.4 %

$1,129

45.0 %

-45.4 %

10

Raleigh, NC

$414,810

5.0 %

-0.5 %

$2,018

46.0 %

-26.7 %

Birmingham,
AL

$236,630

7.5 %

0.7 %

$1,139

46.4 %

-23.0 %

16

Salt Lake City,
UT

$523,731

0.0 %

0.1 %

$2,540

37.5 %

0.3 %

38

*Table ordered by market size

The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research.
U.S. weekly averages of 30-year fixed-rate mortgages as reported in the Freddie Mac Primary Mortgage Market Survey® (PMMS).

Source: Zillow