Luxury Listings Making Comeback After a Sharp Spring Collapse

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In April and May, new listings of the most expensive homes slowed severely, dropping by about half compared to the year before, while listings of the least expensive homes dropped by less than a third. At the time, the split was attributed to sellers with higher-priced homes having more flexibility in their decision to list, with many waiting to see what effect the pandemic might have.

Buyer demand has continued to be strong, with home values holding steady and homes being snatched off the market even more quickly than last year. So in June, sellers of high-end homes -- generally around double the value of the median home in large metros -- dove back into the market and new listings for expensive homes soared, now down only 9% from last year.

Meanwhile, new listings of the most affordable homes have not seen the same jolt -- they've recovered slightly, but still are 29% below last year's level. That means listings of more affordable homes have seen a recent increase of about three percentage points, while high-end listings jumped almost 40 percentage points since May. This reversal may show that sellers are not returning to the market equally -- likely explained by widespread unemployment, decreased market activity, and other financial constraints that present challenges for both buyers and sellers at the bottom of the market.

The national trend is echoed in many large markets across the country, with some metros  -- including San Francisco (up 33.5%), San Jose (up 27.3%) and Miami (up 13.1%) -- seeing new listings for the most expensive homes easily surpassing last year's levels. Denver is the only large market where listings of the most expensive and the most affordable homes are both up from last year, 4.4% and 4.9% respectively.

"The way unemployment has hit in this recession -- with more layoffs in service, retail, food, entertainment, and other jobs unable to be done remotely -- could result in vastly different experiences on either end of the housing price spectrum," said Zillow economist Jeff Tucker. "Millions of Americans who lost jobs or income are only able to stay in their homes right now thanks to extraordinary forbearance programs, which means they likely have to pause their plans to trade up or move to a new city. But for wealthier homeowners whose employment has remained stable and are looking to trade up, now may be an opportune time to sell and lock in a record-low mortgage rate on their dream home."

The recent composition change in listings has contributed to the sudden increase in list prices. While list prices remained soft through May -- likely because new listings for affordable homes outpaced high-end homes -- Zillow's most recent data shows median list price is starting to accelerate. Median list price is now at $337,160, a 0.6% increase from a week ago and 3.8% higher than this time last year.

Although high-end listings have seen an increase, new listings still remain below normal levels, and fell 5.1% from last week. Total inventory also is down -- 0.7% from last week and 20.7% from last year. Zillow is only beginning to see a slowing in home value growth, unrelated to the composition effects of new listings, and the current forecast expects home prices to fall very slightly through October 2020.