New Listings Rise as Buyer Activity Stays Tepid

According to a recent Zillow report, home sellers are returning to the market, but affordability issues still constrain it. New listings increased 8% from April to May, surpassing last year’s historically low levels by 13%. Year over year, new listings rose 12.6% in May, contrasting sharply with a 22.8% drop the previous year. Significant annual increases were seen in cities like San Diego, Seattle, Charlotte, Raleigh, and San Francisco. Florida cities such as Tampa, Orlando, Jacksonville, and Miami also saw substantial inventory growth. Despite this, total inventory remains 34% below pre-pandemic levels, the narrowest gap in over three years.

Zillow’s senior economist, Orphe Divounguy, noted that the “lock-in effect” appears to loosen, but affordability challenges persist, particularly for younger households and first-time buyers. Inflation and high mortgage rates have reduced competition for houses, leading to softened price growth. New listings outpaced home sales in May, resulting in decreased competition and price growth. The annual increase in typical home values slowed from 4.4% in April to 3.9% in May, with monthly price appreciation also dropping. Additionally, 23.9% of homes on the market saw a price cut in May, the highest share for May in over six years.

Zillow: Housing Shortage Worsens

The U.S. housing shortage grew to 4.5 million homes in 2022, up from 4.3 million in 2021, according to Zillow. Despite 1.4 million homes being built in 2022—the highest since the Great Recession—the number of U.S. families increased by 1.8 million, widening the deficit. In 2023, 1.45 million homes were completed, which is still insufficient given the growing need.

In 2022, there were about 3.55 million vacant homes, but 8.09 million individuals or families were living with non-relatives, indicating significant “missing homes.” Zillow’s Senior Economist, Orphe Divounguy, highlighted the affordability crisis, noting that nearly half of renter households are cost-burdened. To address this, more aggressive measures are needed beyond the current pace of construction, such as changing zoning laws, reducing permit delays, and expanding affordable housing funds. Major cities like Boston, Sacramento, and San Francisco are among the hardest hit by the shortage.

MBA: Mortgage Applications Rise in Weekly Survey

Mortgage applications rose 0.8% for the week ending June 21, 2024, according to the Mortgage Bankers Association (MBA). This increase includes an adjustment for the Juneteenth holiday. The Market Composite Index, reflecting mortgage application volume, went up 0.8% seasonally adjusted, while unadjusted, it dropped 10% from the previous week. The Refinance Index remained steady but was 26% higher than the same week last year. The seasonally adjusted Purchase Index grew by 1%, though it fell 10% unadjusted and was 13% lower compared to the same week a year ago.

MBA’s Vice President Joel Kan noted that mortgage rates dipped slightly, with the 30-year fixed rate dropping to 6.93%, the lowest in over three months. Despite lower rates, refinance activity didn’t increase significantly, as many homeowners already have mortgages with lower rates. Purchase applications saw a modest rise, especially in government loans like FHA and VA, which increased by more than 2% over the previous week. The FHA share of applications rose to 13.1%, while the VA share decreased to 13.8%. The average interest rates for various mortgage types saw slight fluctuations, with some decreasing and others increasing marginally.