Home Sellers Hold Back as Housing Market Faces Slowdown: What Buyers Can Expect

The August housing market has seen a notable shift, with home sellers pulling back in response to sluggish demand, especially from low-income homebuyers. According to Zillow’s latest market report, this trend has led to a significant decrease in new listings, setting a record low for the month. Despite these challenges, opportunities still exist for active buyers, particularly in areas where inventory is holding steady. However, the overall momentum that had been favoring homebuyers is beginning to slow.

Sellers Hold Back Amid Buyer Hesitancy

The primary factor behind the slowdown in new listings is the ongoing affordability crisis. Many potential buyers are still hesitant to make purchases due to high home prices, which has made it easier for those who remain in the market to find homes. Zillow’s market heat index shows that there is significantly less competition among buyers this August compared to previous years, and the market is now more balanced between buyers and sellers across the country.

Despite this, home values have stalled. Zillow’s Property Value Index, which tracks the average growth in home prices across the nation, has remained flat for the past year. This marks the second-slowest monthly gain since early 2018, indicating that the housing market is cooling.

Additionally, homes are taking longer to sell. The average time to sell a home in August increased to 27 days one day longer than pre-pandemic averages and a full week longer than last year. Interestingly, despite these slower sales, competition ticked up slightly during the latter part of the summer, indicating some buyer activity as the season came to a close.

Sellers Respond to Market Challenges

In response to this drop in buyer activity, many potential sellers have put their plans on hold. Zillow’s data shows that the number of new listings in August dropped by 7.3% month-over-month, marking a decline more severe than what is typically seen during this time of year. With mortgage rates low and homeowners enjoying substantial equity growth, many are choosing to stay put rather than list their homes.

Since February 2020, the average home value has risen by 46.5%, and many homeowners feel no urgent need to sell in a market where affordability remains a significant challenge. Additionally, about 37% of recent sellers reported that a job change prompted their decision to sell, and a worsening labor market could lead to even fewer homeowners needing to move in the near future.

Regional Variations in Housing Market Trends

While national trends reveal a slowdown in new listings, regional variations continue to shape the housing market. In regions like the South, buyers have the upper hand, with an increase in available options in former pandemic-era hotspots such as Miami, Tampa, and Austin. Seattle, which has seen a 22% increase in inventory over the past year, has also shifted from a seller’s market to a more balanced one, benefiting buyers.

On the other hand, markets like the San Francisco Bay Area and parts of the Northeast, including Boston and New York, remain seller-friendly. In these areas, inventory levels are still significantly lower than pre-pandemic averages, and competition continues to favor sellers due to limited supply.

Key National Market Insights

• Home Values: The typical U.S. home value is $363,946, with the typical monthly mortgage payment (assuming 20% down) standing at $1,855. Home values increased in only 2 of the 50 largest metro areas in August, with Buffalo and New Orleans seeing the most significant month-over-month gains.
• Inventory & Listings: New listings fell by 7.3% in August compared to the previous month, and total inventory decreased by 1.3% from July’s peak. Listings are still 22.2% lower than pre-pandemic levels, and the median age of inventory increased to 66 days. While inventory levels have increased compared to last year, they remain lower than they were before the pandemic.
• Price Cuts & Buyer Competition: Around 25.8% of listings had a price cut in August, which was flat compared to last year. Meanwhile, 28.8% of homes sold for above their asking price, showing a slight decrease in competitive bidding compared to last year.
• Pending Sales: Newly pending listings were down 2.6% month-over-month, but up 4.6% year-over-year. The median number of days for homes to go under contract increased to 27 days, which is 3 days longer than in July.

Looking Ahead: What Buyers Can Expect

Despite the overall slowdown, the market is still providing opportunities for buyers. With less competition in many regions, buyers who are financially prepared and still active in the market may have more bargaining power than in previous years. Sellers who are still active may be more open to negotiations, particularly as homes take longer to sell.

Buyers should remain aware that the window of opportunity may not stay open indefinitely. As the market stabilizes, more sellers could re-enter the market, which would once again tilt the balance in favor of sellers. For now, however, those who are ready to buy and can navigate the shifting landscape may find deals and options that were unavailable earlier in the year.

The market’s resilience despite the challenges, including rising mortgage rates and affordability issues, shows that homeownership remains a desirable goal for many, even if the process of achieving it requires more patience and flexibility than in the past. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.