Buyers Gaining Time and Options as Housing Market Rebalances (July Market Report)

By Skylar Olsen on Aug. 18, 2022

  • U.S. home values fell 0.1% from June to July, the first decline in the raw Zillow Home Value Index since 2012. Home values fell last month in 30 of the 50 largest metro areas, but are still up 16% from a year ago. 
  • Rising inventory is being driven by homes lingering on the market and new listings trailing pre-pandemic levels. It took 10 days for a listing to go pending in July, two days longer than in June.
  • Rent appreciation is slowing, but the growth rate remains much higher than pre-pandemic levels

After two years of unprecedented growth, national home values fell slightly month-over-month for the first time since 2012, the year home values hit a trough after the housing bubble and bust of the aughts. While July’s housing market data update is big news, and could get first-time buyers’ hopes up, the future is unlikely to bring meaningful improvement to housing affordability.

Prices fall for the first time in a decade

The typical U.S. home value now stands at $357,107 after declining by 0.1% ($366) month over month in July, as measured by the raw Zillow Home Value Index (ZHVI). A more responsive, but also more volatile flavor of Zillow’s headline price index – monthly growth in the raw ZHVI – has relaxed since reaching a recent peak in April of 1.9% (a rate that would annualize to a whopping 25.1%), slowing to 1.2% growth (15.3% anualized) in May and 0.8% growth (9.7% annualized) in June. 

Home values measured by raw ZHVI fell from June to July in 30 of the 50 largest metro areas, an increase from 13 metros the previous month. The largest monthly home value declines were in San Jose (-4.5%) and San Francisco (-2.8%, that’s -28.7% anualized) — the nation’s most expensive major markets — followed by Phoenix (-2.8%) and Austin (-2.7%), which saw the most extreme growth over the pandemic. Values increased the most from June in Miami (1.5%, a still aggressive 19% annualized rate), Richmond (1%, 12.1% annualized) and Memphis (0.9%, 11.2% annualized), although monthly growth is decelerating in these markets as well. 

While the recent decline in prices is a notable development, the housing market is still far from a return to “normal” conditions. The current slowdown is prompted by the collision of extreme price growth during the early- and mid-pandemic with the sudden increase in mortgage rates since December – a combination that swiftly weakened would-be homebuyers’ ability to afford or qualify to purchase their next house. The nation’s typical home value is still up 16% year over year and 44.5% since July 2019, despite softer pricing in more recent months. Incorporate higher mortgage rates, and the typical mortgage payment has risen by more than 60% in just one year. While high prices plus higher mortgage rates have pushed some buyers from the market for now, those shoppers who are able to proceed suddenly face a much less competitive market, offering them more time to conduct their search and more options to consider. 

Inventory increases continue as homes take longer to sell and sellers cut prices

Cooling competition among buyers has resulted in homes spending more time on the market before selling. While the typical home that goes under contract still does so in a historically short amount of time, this market velocity has slowed considerably from the rapid pace set earlier this year. Homes went pending in a median of 10 days in July – two days slower than the median pace in June. Homes lingering on the market continue to push for-sale inventory up, even as the rate of new homes entering the market slows. The number of active for-sale listings during the month increased by 5.1% in July from June. The increase was the fifth consecutive monthly uptick, with each month successively stronger (for the most part) than seasonally typical for the spring into summer shopping season. July’s monthly inventory lift at 5.1%, for example, dwarfs the 1% average for July during 2018 and 2019. 

While the pool of inventory is increasing quickly, a more substantial increase in for-sale listings has been hindered by slowing new construction – home starts fell 9.6% in July from June – and general hesitation from would-be sellers. New for-sale listings of existing homes fell 13.6% month over month in July. A far bigger drop than is seasonally typical, the rate of new listings hitting the market has been slower than pre-pandemic norms since the beginning of the year. In July for example, 16.6% fewer new listings were put on the market than the average July from 2018 and 2019. Would-be sellers remain mindful of their ability (or lack thereof) to purchase their next home and rising mortgage rates have left many homeowners “locked in” to their existing interest rate. A massive wave of homeowners refinanced during the pandemic, either to benefit from historically low mortgage rates directly or to harvest their home’s equity with a cash out refinance. Cheap financing offered an opportunity for many to remodel their property to better meet their changing needs rather than move on. As a result, the recent increases in for-sale inventory are more reflective of reduced competition than any real increase in the overall options that buyers will have over their multi-month shopping experience. What’s more, this lack of new listing activity should continue to buoy home prices against persistent or deeper declines

Active sellers and their agents are suddenly having to adjust to the changing market conditions. The share of for-sale listings with a price cut jumped to 18.6% in July – up 7.5 percentage points from July 2021 and more than double the share of listings that saw a price decrease in April. While the overall share of listings seeing a price reduction isn’t abnormal – in the years preceding the pandemic it wasn’t uncommon for one in five listings to adjust their price during the month to help the property sell in reasonable time – the sharp increase in this activity is a loud indicator of how sellers are shifting their pricing strategies to account for quickly changing market conditions, even if recent price reductions haven’t materialized into true bargains for home shoppers yet.

Rent growth continues to moderate

The rental market remains in a period of relative calm, continuing a trend that’s formed in recent months. The nation’s typical monthly rent in July was $2,031, up 0.6% from June and up 13.7% from a year prior. After a rapid run-up that peaked in February, and seeing higher volatility throughout the pandemic’s first year and a half, rent growth has moderated in recent months. That said, although growth is decelerating, the annual growth rate is still more than three times that of July 2019.

Among major metros, the most significant slowdowns in monthly rent growth since July of last year occurred in Las Vegas (from 3.6% to -0.2%), Phoenix (3.5% to -0.3%), Tampa (3.9% to 0.3%), and Austin (3.8% to 0.7%). 

The Big Picture

The housing market is ultimately correcting for extreme pressure during the pandemic. However, challenges to new supply and strong long-run housing demand driven by massive younger generations aging into first-time home buying suggests that, as the slowdown continues to progress and competition and price pressures ease, enough buyers will be ready to move forward and turn the market back toward (hopefully healthier) positive price growth. 


NAR Chief Economist Addresses Senate Committee

nar building washington dc

JULY 22, 2022

By Kerry Smith

Sales will weaken and for-sale inventory will grow, but it won’t do much to help affordability, Chief Economist Lawrence Yun said.

WASHINGTON – National Association of Realtors® (NAR) Chief Economist Lawrence Yun spoke before the U.S. Senate Committee on Banking, Housing and Urban Affairs as they dig deeper in an attempt to understand what’s happening in the U.S. housing market.

Yun told the committee that he doesn’t foresee a nationwide decline in home prices despite indications that price growth is set to slow. He testified that the potential for weaker sales should increase available for-sale inventory in some markets, but not enough to diminish persistent affordability constraints that, for many Americans, have kept homeownership out of reach for years.

“In the near term, I do not expect the situation to change appreciably,” Yun said Thursday. “Historic undersupply in the market, combined with continued demand, will likely drive ongoing issues with affordability for many Americans.

“Any short-term price adjustments, if they occur, will be less consequential compared to the immense longer-term housing affordability challenges we face as a country.”

Thursday’s hearing, Priced Out: The State of Housing in America, was recorded and can be viewed online.

The committee hearings come as the nation confronts a 6-million-unit housing shortage. The decades-in-the-making phenomenon has helped sustain year-over-year price growth for a record 124 consecutive months. A study of other circumstances influencing the market is also particularly compelling given COVID’s impact on U.S. housing and the more recent fluctuations in mortgage interest rates.

“When the Federal Reserve essentially went all-in in the early months of the pandemic … the decline in mortgage rates and the cautious reopening of the economy boosted housing demand,” said Yun. “The housing market always responds to changes in mortgage rates.”

Interest rates, which had been consistently in the 4-to-5% range in the decade preceding COVID-19, hovered near record lows of around 3% throughout much of 2020 and 2021. NAR’s most recent existing home sales report found that the average commitment rate for a 30-year, conventional, fixed-rate mortgage in June was up to 5.52%.

“Any increases in available inventory observed over the first half of this year have been offset by the corresponding increases in consumer costs,” Yun said on Capitol Hill, explaining that rate increases of roughly 2.5 percentage points have added about $800 per month to a median-priced house payment.

“This affordability crunch is felt most acutely as we move down the income scale and by minority households, given the current income distribution in America,” he continued. “That is why housing supply must be addressed to moderate home price and rent gains.”

© 2022 Florida Realtors®


Existing-Home Sales Retract 2.4% in April

May 19, 2022

Media Contact:  Quintin Simmons 202-383-1178

Key Highlights

  • Existing-home sales fell for the third straight month to a seasonally adjusted annual rate of 5.61 million. Sales were down 2.4% from the prior month and 5.9% from one year ago.
  • With slower demand, the inventory of unsold existing homes climbed to 1.03 million by the end of April, or the equivalent of 2.2 months of the monthly sales pace.
  • The median existing-home sales price increased at a slower year-over-year pace of 14.8% to $391,200.

“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said Lawrence Yun, NAR’s chief economist. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”

Read full NAR article


How Homeownership Can Help Shield You from Inflation

How Homeownership Can Help Shield You from Inflation | MyKCM

If you’re following along with the news today, you’ve likely heard about rising inflation. You’re also likely feeling the impact in your day-to-day life as prices go up for gas, groceries, and more. These rising consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.

If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.

Homeownership Offers Stability and Security

Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.

Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:

A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.” 

So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.

Use Home Price Appreciation to Your Benefit

While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher.

In inflationary times, it’s especially important to invest your money in an asset that traditionally holds or grows in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):

How Homeownership Can Help Shield You from Inflation | MyKCM

So, what does that mean for you? Today, experts say home prices will only go up from here thanks to the ongoing imbalance in supply and demand. Once you buy a house, any home price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value (even in inflationary times), you have peace of mind that history shows your investment is a strong one.

Bottom Line

If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let’s connect.


Not many more homes are expected to go up for sale

By Clare Trapasso
Dec 1, 2021

2 of a 3 part series
Highlights:

  • “The shortage of homes for sale, that has been more than a decade in the making, will keep home prices high,”
  • Millennials are a massive generation—next year, there will be more than 45 million millennials between the ages of 26 and 35, which are prime homebuying years.

Unfortunately, for frustrated buyers who have had trouble finding the right homes in the right locations at the right price, there isn’t expected to be a rush of homes hitting the market.

Realtor.com economists predict the number of homes for sale, which is hovering around record lows, will tick up only 0.3%. That’s partly due to builders having a tough time ramping up construction as they contend with shortages in workers and materials, compounded by the global supply chain backups. (Single-family housing starts, which is when builders start construction, is expected to rise only 5% next year.)

There are plenty of investors snapping up single-family homes and turning them into rentals. And there is no tidal wave of foreclosures expected to hit now that the government moratoriums are expiring.

There are also more homebuyers today than there are abodes for sale.

Millennials are a massive generation—next year, there will be more than 45 million millennials between the ages of 26 and 35, which are prime homebuying years. So there would need to be substantially more homes built to keep up with the needed housing—except builders stopped building during the Great Recession and there are fewer homes going up today.

“The shortage of homes for sale, that has been more than a decade in the making, will keep home prices high,” says Hale.

Sales will also continue to climb, hitting a 16-year high as they go up by 6.6%, Realtor.com economists anticipate. That’s partly because technology has sped up the homebuying process. Plus, buyers are jumping on whatever comes up for sale in record time before the property is snapped up by another eager buyer.

Attractively priced homes in good shape are expected to continue going under contract quickly.

“Homes are selling so much faster than they have in any previous [years],” says Hale.

That speed supports increased housing turnover as more abodes change hands as folks move into their first homes or relocate, trade up into larger residences, and downsize.

The popularity of the suburbs is also likely to endure. They emerged as the places to be during the pandemic as buyers could score more square footage and bigger yards for less money than in the bigger cities.

“For years, we heard about the dying suburbs because millennials didn’t want to live there, but as they age, guess where they’re heading?” asks Hale.

Some were even moving to the burbs before the pandemic.

“This budding trend was accelerated by the needs of aging millennials, often with families, trying to grapple head-on with the realities of doing more than ever before from home,” says Hale.

Remote work will also likely be a factor. With more workers telecommuting or going into the office only a few times a week, they don’t have to contend with grueling commutes five days a week. Many are more comfortable moving farther outside of the cities where they can get larger abodes with room for a home office at an attractive price.

That’s likely to keep prices high in desirable communities.

“Shoppers were looking for affordable homes with space that could be used flexibly to accommodate working, schooling, exercising, cooking, and all of the other living and relaxing we used to take for granted,” says Hale.

It won’t be easy for first-time homebuyers

First-time buyers are likely to continue struggling to compete with the offers over the asking price and win the bidding wars.

The ace in their pocket is the work-from-home phenomenon that has allowed many white-collar professionals to work from anywhere they have a strong Wi-Fi connection. So they may be able to relocate to cheaper destinations that make up for what they lack in Michelin star restaurants with more affordable home prices.

“Maybe they’re not buying a home in or near a major city where prices are high and the market is still competitive,” says Hale. “But they can move farther away from the city to the suburbs or to an entirely new city where it’s more affordable.”

The savings many who held on to their jobs were able to amass early on in the pandemic—when the stimulus checks went out and many folks cut back on dining out and traveling—may help them with the down payments. Some buyers temporarily moved back home with families or doubled up with friends to save on housing costs as well.

“I know a lot of people are expecting housing prices and sales to peak and then decline. Instead, I think there’s enough momentum from these younger buyers who want to get into the housing market to keep sales moving forward,” says Hale. “They are going to succeed because that drive to buy a home and make it happen when you’re ready is really strong.”


Will Home Prices and Rents Finally Fall? Our Bold Predictions on Real Estate in 2022

By Clare Trapasso
Dec 1, 2021

1 of a 3 part series
Highlights:

  • Prices will stay high, inventory will remain tight, and mortgage rates will rise
  • Prices aren’t anticipated to come down from the highs
  • “The pace of price growth is going to slow notably, bringing it more in line with buyers’ incomes”

Here’s what we already know: Since the COVID-19 pandemic began, the real estate market has been on a wild ride of unprecedented highs and lows—record-high home prices on one side, record-low mortgage rates and available homes for sale on the other. It’s been a time of overwhelming stress for many, gigantic profits for some, and great disorientation for most of us.

Now the housing experts say the market is “normalizing.” But what does that mean? Will home prices and rents finally come down? Will more homes go up for sale? And what does the year ahead have in store for the real estate market?

The Realtor.com® 2022 housing forecast anticipates the market will continue slowing down from the frenzy seen in the spring when prices shot up to new heights. However, prices will stay high, inventory will remain tight, and mortgage rates will rise.

The bottom line: Even as the market calms down further, it’s still expected to be challenging for buyers, especially those purchasing their first homes.

“The 2022 housing market will continue to be a seller’s market with fast-moving homes and rising prices,” says Realtor.com Chief Economist Danielle Hale. “But the competition should be a bit less intense than we’ve seen recently.”

Home prices will stay high, but price growth will continue slowing

Home prices aren’t expected to keep zooming up into the stratosphere in 2022 the way they did this year. So buyers can breathe at least a shallow sigh of relief. Instead, Realtor.com economists anticipate they’ll increase at a much slower rate of just 2.9% over this year compared with an anticipated 12% rise in 2021.

This means the double-digit price growth that confounded buyers earlier this year is expected to taper off.

However, prices aren’t anticipated to come down from the highs they reached this year due to the continuing shortage of properties for sale and hordes of buyers continuing to enter the market. They just won’t go up so much as quickly.

“Price growth is expected to move back toward a normal range, but this is on top of recent high prices,” says Hale. “So prices will [still] hit new highs.”

While that’s not great news for buyers, homes aren’t expected to cost much more than they did just a few months ago.

“The pace of price growth is going to slow notably, bringing it more in line with buyers’ incomes,” says Hale. “With prices high and mortgage rates beginning to tick up, people won’t be able to be as aggressive in what they’re willing to pay.”


Is the Number of Homes for Sale Finally Growing?

Is the Number of Homes for Sale Finally Growing? | MyKCM

An important metric in today’s residential real estate market is the number of homes available for sale. The shortage of available housing inventory is the major reason for the double-digit price appreciation we’ve seen in each of the last two years. It’s the reason many would-be purchasers are frustrated with the bidding wars over the homes that are available. However, signs of relief are finally appearing.

According to data from realtor.com, active listings have increased over the last four months. They define active listings as:

The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”

What normally happens throughout the year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Historically, housing inventory increases throughout the summer months, starts to tail off in the fall, and then drops significantly over the winter. The graph below shows this trend along with the month active listings peaked in 2017, 2018, and 2019.

What happened last year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Last year, the trend was different. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale because of the pandemic (see graph below). In 2020, active listings peaked in April, and then fell off dramatically for the remainder of the year.

What’s happening this year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Due to the decline of active listings in 2020, 2021 began with record-low housing inventory counts. However, we’ve been building inventory over the last several months as more listings come to the market (see graph below):There are three main reasons we may see listings continue to increase throughout this fall and into the winter.

  1. Pent-up selling demand – Homeowners may be more comfortable putting their homes on the market as more and more Americans get vaccinated.
  2. New construction is starting to take off – Though new construction is not included in the realtor.com numbers, as more new homes are built, there will be more options for current homeowners to consider when they sell. The lack of options has slowed many potential sellers in the past.
  3. The end of forbearance will create some new listings – Most experts believe the end of the forbearance program will not lead to a wave of foreclosures for several reasons. The main reason is the level of equity homeowners currently have in their homes. Many homeowners will be able to sell their homes instead of going to foreclosure, which will lead to some additional listings on the market.

Bottom Line

If you’re in the market to buy a home, stick with it. There are new listings becoming available every day. If you’re thinking of selling your house, you may want to list your home before this additional competition comes to market.


Experts Agree: Options Are Improving for Buyers

Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC] | MyKCM

Some Highlights

  • Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market.
  • Although the supply increases are modest, more homes means more options for buyers. A rise in inventory may also help slow the price gains we’ve seen recently and could be a sign of good things to come.
  • If you’re searching for a home, rising inventory is welcome news. Let’s connect today to discuss new listings in our area.

U.S. Homeowners Enjoyed $1.9 Trillion of Equity Gains in Early 2021

CoreLogic’s newly released Homeowner Equity Report for the first quarter of 2021 shows U.S. homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.

Residential News » Irvine Edition | By Michael Gerrity | June 10, 2021 8:59 AM ET

While the coronavirus pandemic created economic uncertainty for many, the continued acceleration in home prices over the last year has meant existing homeowners saw a notable boost in home equity. The accumulation of equity has become critically important to homeowners deciding on their post-forbearance options. In contrast to the financial crisis, when many borrowers were underwater, borrowers today who are behind on mortgage payments can tap into their equity and sell their home rather than lose it through foreclosure. These conditions are reflected in a recent CoreLogic survey, with 74% of current homeowners with mortgages noting they are not concerned with owing more on their home than it is worth within the next five years.

“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” said Frank Martell, president and CEO of CoreLogic. “These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”

WPJ News | Frank Nothaft, Freddie Mac's chief economist
Dr. Frank Nothaft

“Double-digit home price growth in the past year has bolstered home equity to a record amount. The national CoreLogic Home Price Index recorded an 11.4% rise in the year through March 2021, leading to a $216,000 increase in the average amount of equity held by homeowners with a mortgage,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This reduces the likelihood for a large number of distressed sales of homeowners to emerge from forbearance later in the year.”

Negative equity, also referred to as underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are currently worth. As of the first quarter of 2021, negative equity share, and the quarter-over-quarter and year-over-year changes, were as follows:

  • Quarterly change: From the fourth quarter of 2020 to the first quarter of 2021, the total number of mortgaged homes in negative equity decreased by 7% to 1.4 million homes, or 2.6% of all mortgaged properties.
  • Annual change: In the fourth quarter of 2020, 1.8 million homes, or 3.4% of all mortgaged properties, were in negative equity. This number decreased by 24%, or 450,000 properties, in the first quarter of 2021.
  • National aggregate value: The national aggregate value of negative equity was approximately $273 billion at the end of the first quarter of 2021. This is down quarter over quarter by approximately $8.1 billion, or 2.9%, from $281.1 billion in the fourth quarter of 2020, and down year over year by approximately $13.3 billion, or 4.6%, from $286.3 billion in the first quarter of 2020.

Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively. Looking at the first quarter of 2021 book of mortgages, if home prices increase by 5%, 195,000 homes would regain equity; if home prices decline by 5%, 260,000 would fall underwater.


Home Price Appreciation Is as Simple as Supply and Demand

Home price appreciation continues to accelerate. Today, prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.

Let’s use three maps to show how this theory continues to affect the residential real estate market.

Home Price Appreciation Is as Simple as Supply and Demand | MyKCM

Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020:As the map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.

Home Price Appreciation Is as Simple as Supply and Demand | MyKCM

Map #2 – The change in state-by-state inventory levels year-over-year reported by realtor.com:Comparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.

The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.

Is there relief around the corner?

The report by realtor.com also shows the monthly change in inventory for each state.

Home Price Appreciation Is as Simple as Supply and Demand | MyKCM

Map #3 – State-by-state changes in inventory levels month-over-month reported by realtor.com:As the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.

We’ll know for certain as we move through the rest of the year.

Bottom Line

Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.