While home buyers may be expecting to find a discount in today’s uncertain economic environment, a new Zillow analysis finds that home prices are showing resilience against the COVID-19 pandemic and no bargains are in sight.
Sales price slowed slightly but appears to be headed toward an upswing, according to Zillow. The median price of U.S. homes sold in May was $263,408, a 4.6% year-over-year increase. However, May was the second consecutive month in which the annual growth rate slowed from the prior month—down from a 5.3% year-over-year increase in April.
The Zillow analysis suggests that the slowdown can be attributed to the change in the types of homes that are on the market, citing that new listings of the most expensive homes in April dropped the fastest while affordable listings weren’t affected as much. This resulted in the year-over-year growth in the median price slowing from 4% the last week of March to 1.1% in early May. Sales on these homes likely closed in May, which moves the composition of sales toward more affordable homes, resulting in a lower median sales price.
However, recent data shows new listings of high-end homes surging in June, which will raise the median list price. Buyers also are outnumbering sellers, with homes typically selling just 20 days after hitting the market—the lowest level recorded by Zillow–and sellers holding firm to asking prices.
“As surprising as it might have seemed at the time, sellers who forged ahead with listing their homes this spring were richly rewarded, when buyers buoyed by record-low mortgage rates flooded their listings with offers,” said Zillow economist Jeff Tucker. “Now, word is getting out that the housing market is on solid ground, so more listings are belatedly rushing to market, extending the busy spring shopping season well into summer. The huge millennial first-time home buying wave is still cresting, pushing demand above what’s still very limited supply, so sellers are likely to find eager buyers for months or even years to come.”
In each of the 50 largest U.S. metros, the median sales price was up from May 2019. Year-over-year growth was highest in Indianapolis, 11.8%, and Salt Lake City, 9.8%, and lowest in Las Vegas, 0.8%, and San Francisco, 1.3%.
However, annual sales price growth had slowed from April to May in 31 of the top 50 metros. Providence, R.I., and Charlotte, N.C., saw the biggest slowdowns, down 2 and 1.9 percentage points, respectively. San Jose, Calif., increased 2.1 percentage points, and Indianapolis was up 1.4 percentage points month over month.
