Continued strong growth in the real estate market coupled with a long-awaited increase in inventories in May, so Zillow’s latest market report. Home appreciation – especially Phoenix home values - continues to break records, and typical market time is just six days. Meanwhile, rents in the US are rising rapidly and breaking out after growth slowed under the pandemic.
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After nearly a year of steady decline, inventories are finally showing signs of recovery at the national level. The month-on-month increase of 3.9% in May is the first increase since July 2020 and only the fifth in the last 24 months. Of the 50 largest US markets, only six saw inventory decline as of April. US inventory levels have fallen 31.2% since May 2020, an improvement from the 32.8% annual decline seen in April. The new stock has risen since mid-March.
At the Phoenix Metro Market:
• The typical home is now valued at $ 367,484, up 23.5% from last year and 3% since April.
• Typical rents are $ 1,620, up / down 17.7% year-on-year and 4.6% since April.
• Inventory was up 1.6% from April. It is 25.3% less than last year.
• Homes typically stay in the market for 7 days before signing.
• 40% of homes sold above list price in March (latest data available) compared to 14% sold above list in March 2020.
“Despite the extremely strong demand for home ownership in this hot market, a steady surge in new listings seems to be finally turning the tide, bringing with it a long-awaited shift towards more choice for buyers,” said Treh Manhertz, Zillow economist. “Builders are rushing to build new homes, while widespread vaccinations and improved business confidence should help current owners put their homes up for sale.”
However, the typical contract duration for a newly listed house nationwide fell to just six days, one day shorter than in April. The hot metro of the Midwest of Cincinnati, Kansas City, and Columbus has the shortest market time at three days.
Annual home appreciation reached 13.2% in May, while monthly growth was 1.7%. Both are new records within the Zillow data that go back to 1996. Typical real estate values are now at $ 287,148. From month to month, growth accelerated in 47 of the 50 largest US markets and slowed in only three – roughly matching the local market heat in April.
Austin maintained its lead in annual value growth with a whopping 30.5% over 2020, followed by Phoenix (23.5%) and Salt Lake City (20.6%). Even the subways with the lowest annual appreciation – Orlando, New Orleans, and Oklahoma City – still have historically strong numbers above 9%.
Typical rents rose significantly, accelerating from 1.3% monthly growth in April to 2.3% in May – the largest monthly increase since 2015. Rents reached $ 1,747 in May, up 5.4% or $ 89 compared to the previous year. In Inland West, the rent increase is particularly strong. Out of the 100 largest US metropolitan areas, Boise, Phoenix, Spokane, Las Vegas, Riverside, Stockton, Fresno and Albuquerque are the top 8 for annual rental growth – all with increases of more than 15%.
The list of big cities with lower rents than last year shrank again when Seattle and Chicago crashed into the countryside. Only the expensive coastal metros in San Francisco, San Jose, New York, Boston and Washington DC remain in the red.
Zillow Economists forecast Property values are expected to rise 14.9% by May 2022, an upward revision from the April forecast. Home sales are projected to hit 5.91 million in 2021, up 4.8% from 2020.
Mortgage rates quoted on Zillow by external lenders started at a monthly high of 2.69% in May, falling on the 7th. Zillow’s real-time mortgage rates are based on thousands of custom mortgage offers anonymous daily by third-party providers on the Zillow Group Mortgages website Borrowers are transmitted and reflect recent changes in the market.