Zillow Market Report

Zillow's latest housing market forecast for 2024, which predicts a significant decline in existing home sales to a 29-year low, as well as a decrease in home values over the next 12 months.

Zillow's Revised Housing Forecast for 2024

Zillow has recently revised its housing market forecast for 2024, projecting significant shifts in home values and sales.

Home Value Predictions

According to Zillow's latest report, home values are expected to see a mixed trend over the next year.

The revised forecast indicates a 6% growth in home values for 2024, but this is a downward adjustment from last month's 1.9% growth projection.

Despite a 4.4% increase in home values compared to April 2023, Zillow anticipates an overall decrease of 0.9% in home values over the next 12 months.

Reasons Behind the Forecast

The key reasons for this forecast adjustment include current market conditions and economic factors.

Higher mortgage rates and reduced buyer affordability are leading contributors to the anticipated decline in home values.

Additionally, the slower growth rate is notably below the pre-pandemic annual average of around 5%.

The Plunge in Existing Home Sales

Alongside the revised home value forecast, Zillow also predicts a significant drop in existing home sales for 2024.

Sales Figures and Historical Context

Zillow's new forecast projects only 4.05 million existing home sales this year, down from last month's projection of 4.10 million.

This would mark the lowest level of home sales since 1995, surpassing even the Great Recession's low of 4.1 million in 2008.

To put this into perspective, 2021 saw 6.12 million home sales, the highest since 2006, while 2022 had 5.3 million sales.

Factors Contributing to the Decline

Several factors are driving this anticipated plunge in home sales.

High mortgage rates are making it more challenging for buyers to afford homes, thereby reducing sales volumes.

Additionally, economic uncertainties and tighter lending standards are contributing to the decreased demand in the market.

Deceleration in Home Value Growth

As the housing market adjusts, the growth in home values is expected to decelerate in 2024.

Slowing Growth Rates

The Zillow housing market report 2024 indicates that while home values are still rising, the rate of growth is slowing.

Home value growth is projected to be 6% this year, which is a notable deceleration compared to previous years.

This slowdown reflects a shift towards a more balanced market, favoring home buyers.

Increase in Listings

One factor contributing to this deceleration is the increase in new for-sale listings.

The market has seen a 15.5% annual increase in new listings as of April 2023.

This uptick in listings is causing homes to stay on the market longer, giving buyers more negotiating power.

Market Variations

It's important to note that market conditions vary by region.

For example, in Sacramento, California, many homes are still selling quickly and receiving multiple offers.

However, the number of offers is not as high as in 2022, indicating a cooling trend.

Mortgage Rates and Housing Affordability

High mortgage rates continue to impact housing affordability, posing challenges for both buyers and sellers in 2024.

Impact of Elevated Rates

Elevated mortgage rates are a significant factor constraining housing demand.

According to data from Redfin, housing affordability is near record lows.

This is due to the combination of high mortgage rates and home prices.

Affordability Challenges

The high rates make it difficult for many buyers to afford homes.

This has resulted in a reduction in sales volumes as fewer people can qualify for loans.

Additionally, economic uncertainties and tighter lending standards further exacerbate affordability issues.

Future Outlook

Despite these challenges, Zillow expects a mild recovery in sales later in the year.

This expectation is partly due to the anticipated lowering of mortgage rates.

However, the market will likely remain difficult for buyers until significant improvements in affordability are realized.

Regional Home Value Trends

Home value trends vary significantly across different regions in the United States, reflecting diverse local market dynamics.

Metropolitan Area Insights

According to the Zillow housing market report 2024, home values increased in all 50 of the largest metropolitan areas from March to April.

This seasonal rise was most notable in San Jose, California, with a 2.9% increase.

Other significant gains were observed in:

  • San Francisco
  • Seattle
  • Milwaukee, Wisconsin
  • Buffalo, New York

Year-over-Year Changes

On an annual basis, home values rose in 47 of the 50 largest metros.

The largest gains were seen in:

  • San Jose, California (12.5%)
  • Hartford, Connecticut (12.3%)
  • San Diego, California (12%)
  • Los Angeles, California
  • Boston, Massachusetts

San Jose's median home price is around $1.5 million, making its 12.5% increase particularly noteworthy.

Declining Markets

Conversely, three metros experienced a decline in home values compared to April 2023.

The most significant decreases were in:

  • New Orleans, Louisiana (7%)
  • Austin, Texas (3.6%)
  • San Antonio, Texas (1.8%)

Housing Inventory and Market Dynamics

Housing inventory levels and market dynamics play crucial roles in shaping the overall housing market trends.

Inventory Levels

As of April, new listings were still down by approximately 25% compared to pre-pandemic levels.

However, there was a 15.5% year-over-year increase in new listings.

Active Listings

The number of active listings, which represents the total number of homes available for sale, increased by 18% compared to the previous year.

Despite this rise, inventory remains down by about 35.7% compared to pre-COVID levels.

Price Adjustments

Price drops were observed in 22.4% of the active listings in April.

This figure is 5.2 percentage points higher than the same period last year.

Pending Sales

New pending listings, which measure contracts signed between buyers and sellers, increased by 4.4% year-over-year according to Zillow.

However, this contrasts with Redfin's report, which shows a 4.3% decline in new pending home sales for the four weeks ending May 12th, marking a three-year low.

The Zillow housing market report 2024 highlights the complex interplay between inventory levels, market dynamics, and regional variations in home value trends. These factors collectively shape the challenging landscape that both buyers and sellers must navigate in the current housing market.

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