Homebuyer demand remains resilient, despite rates, shrinking listings
Homebuyer demand remains strong despite rising mortgage rates and shrinking listings, Zillow’s October market report found.
Last month, homebuyer demand showed its resilience, despite mortgage rates being at a 23-year high and inventory continuing to be limited, with homes priced appropriately being purchased in record time.
Zillow chief economist Skylar Olsen says as mortgage rates neared 8% in October, the U.S. housing market continues to cool, with inventory rising and appreciation decelerating.
“As interest rates rose, some pent-up sellers appear to have been shaken free of waiting for rates to drop,” Olsen said. “New listings have nearly escaped the red annually and are trending out of a mortgage rate lock-induced hole. A record number of households in prime homebuying ages are providing buyers, despite the headwinds.”
October mortgage rates were 8% at month’s end, pushing monthly payments up by more than 4% from September. And that average $1,991 monthly mortgage payment is almost 10% higher than it was a year ago and nearly double what it was in 2021.
Home values on the rise
The national typical home value in October was $347,972, up 2.3% from a year earlier. October home values did fall 0.3% from September (compared to the 0.1% drop from August to September), showing “a slightly faster deceleration than pre-pandemic norms,” according to the report.
In 40 of the top 50 markets, home values fell in October.
Miami home values rose 6% year over year to $475,761 and were up 0.5% from September.
Housing inventory ups and downs
Housing inventory last month was still depleted, as new listings fell 5% from September, a drop the report notes is actually smaller than seasonally expected. But, it also found inventory levels to be the lowest of any October since 2018.
Total inventory was a different story last month as it climbed 2.6% from September, a result of “fewer sales and an unexpectedly small September dropoff in new listings,” Zillow said.
New inventory in Miami in October increased 11.8% from 2022, while total inventory grew 5.6%.
