According to a new Market Report from Zillow, the typical, average home value surpassed the $350,000 mark for the first time ever as demand from buyers continues to collide with sellers who are reluctant to sell their homes in fear of taking out a mortgage at a higher rate.
"Home buyers have persisted this spring despite daunting affordability challenges and record-low inventory," said Jeff Tucker, Senior Economist at Zillow. "Demand typically begins to ease in the summer, and there are signs that competition is waning, but large price declines are unlikely until more homeowners list their homes for sale."
During the typically hot summer-selling season, the typical U.S. Home value climbed 1.4% from May to June, continuing a four-month hot streak. The new peak of $350,213 is 1% higher than a year ago, which was when this number last peaked.
According to Zillow, affordability remains the key to market strength, as lower-priced metro areas posted the largest monthly gains; Chicago, Buffalo, New Orleans and Hartford all notched 2.1% monthly growth, with Detroit close behind at 2%. Those markets all have typical home values lower than the national average. As in May, home values rose from the previous month in all 50 of the largest metro areas. The slowest monthly growth was in Austin (0.4%), followed by Jacksonville, Memphis, San Antonio and Birmingham, which all saw 0.8% increases.
But a drought of new listings seems to be the current limiting reagent for the market. Even though the number of new homes for sale increased 2.4% month-over-month, listings remain down 28% year-over-year. June is usually one of the best months for fresh inventory, but this year only 376,500 new listings arrived on the market. That's closer to levels seen in the slower months of February and October than to average new listings in June (505,100), according to Zillow data reaching back to 2018.
A lack of new listings has dogged the housing market for nearly a year, and higher mortgage rates remain the chief suspect. Rates at 6.8% this week (the highest since November, up from 5.1% a year ago and 3% two years ago) make it especially costly for homeowners—most of whom have a mortgage well below today's rates—to borrow for their next home purchase.
Another explanation could be that homeowners are holding out for higher prices. Home values have steadily increased since January in much of the country, but remain below peaks reached last summer in many markets.
"It could be that some homeowners have been waiting until prices set new highs in their market before opting to cash in their chips," Tucker said.
To view the report in its entirety, including rankings, click here.