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Buyers were slow off the mark in spring, but it’s shaping up to be a hot summer for the market.
Is the housing market finally shining again? A new report is showing that homebuyers are back to the market, and signals show greater growth to come.
According to Zillow’s June Market Report, home sales were up 5.9 percent from a year ago and 9.2 percent from May. The real estate marketplace company is seeing surges across the country, especially in places like Sacramento, Orlando, and Columbus, Ohio.
“The market wrestled with some uncertainty throughout the spring shopping season, but mortgage rates declining from their mid-spring peak has added some extra heat as we head into an already toasty summer,” said Mischa Fisher, chief economist at Zillow, in the report. “While the lowest price tiers are exhibiting some softness in terms of price, they also had the most listing-activity growth, the first time since 2022 that’s been the case. While the divergence in sale price is notably ‘k-shaped,’ affordability gains did continue in June.”
A “k-shaped” housing market means the real estate landscape has split into two opposite directions, heavily favoring wealthy buyers while squeezing out lower- and middle-income individuals. Zillow’s report noted that affordability is increasing, as mortgage costs have gone down 2.5 percent year-over-year. Despite affordability fears, homebuyers are still hitting the market.
“I think it’s a lot of people snatched up homes during Covid the first couple of years, and now are kind of starting to hit that five-to-six-year period where you’re starting to think about selling it,” Elyse Sarnecky, director of marketing at Marketplace Homes, told Inc. “With interest rates where they are now, I think a lot of buyers are wanting to test the market.”
Regional shifts
An economist told Inc. back in early June that geopolitical tensions in Iran inflating costs overall across the United States would cause many traditional homebuyers to forego the annual spring rush and wait until prices had cooled. This sentiment was shared by Michigan-based Sarnecky and Robert Little, a Nevada-based realtor with Remax.
“I think buyers have finally accepted that waiting for the ‘perfect’ interest rate probably isn’t going to happen. Over the last year, a lot of people put their plans on hold thinking rates would fall quickly. Now, they’re realizing life doesn’t stop because of mortgage rates,” Little told Inc.
The Zillow report details varying year-over-year percentages across the U.S. compared to the overall national average of 5.9 percent. While Detroit has seen a steady increase of just 0.6 percent, Las Vegas’s was much higher, at 10.9 percent. This could be in part due to a recent surge in homebuyers relocating toward the Sun Belt for affordability while staying close to metro work hubs.
“One thing I’ve noticed is buyers are doing a lot more homework before they write an offer. They’re looking closely at insurance costs, HOA fees, utility bills, and the overall monthly payment, not just the sales price,” says Little.
“Condition is also becoming a much bigger factor,” he adds. “Homes that are clean, updated, and priced correctly are still selling. Homes that are overpriced or need a lot of work are sitting longer.”
Continued growth
According to the Zillow report, new listings have continued to grow, rising 3 percent year-over-year, as the market looks to adjust to near-flat but increasing demand. Mortgage payments have also cooled, showing a 2.5-percent decrease year-over-year. Due to the spring delay in home buying, experts theorize July data could also be positive. However, this could have repercussions for 2027 data if the traditional home buying cycle returns to normal.
“There’s a lot of things going on, whether it’s the political climate, whether it’s the housing bill that’s going around, but this year in particular it seems like people were a little bit slower. Usually, the spring market is kind of when they really start to set off,” says Sarnecky. “A lot of factors kind of pushed that spring start, I would say about six to eight weeks or so. So, it’ll be interesting to see next month’s report as well.”
This post originally appeared at inc.com.
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