Despite Demand, U.S. Home Sellers Slow to Return to the Market

Zillow is reporting this week that the U.S. housing market still favors sellers, indicating the recent sales dip has more to do with a lack of inventory than waning interest from potential buyers from the Coronavirus outbreak. In the rental market, renters and landlords are entering an uncertain period after some added unemployment benefits expired at the end of July 2020.

"Record-low mortgage rates are helping fuel a brisk pace of home sales later into this summer than normal, but buyers are having to compete over fewer and fewer listings," said Zillow economist Jeff Tucker. "The flow of new listings has recovered somewhat, but not fast enough to replace all the recent sales, so inventory continues to plumb new record lows. There's no single reason sellers have been slow to return, but some possibilities include reluctance to having strangers tour their home; concerns about difficulty getting their next home and an assumption that they couldn't sell for a high price right now."

Newly pending sales fell last week, but other indicators show a hot market

• Newly pending sales fell 0.9% week over week, but remain 13.8% higher than the same period a year ago.
• Homes that went under contract last week were typically on the market for 14 days. That's 11 days faster than last year.
• The share of listings with a price cut held steady at 4.2%, which is 1.3 percentage points lower than a year ago. It's remained at that share for the past four weeks.

Uncertainty ahead for the rental market as some aid expires

• Rents were chugging along at a stable pace before the coronavirus pandemic, but heavy service-sector unemployment has hit renters more severely than homeowners, impacting rental demand and slowing price growth. Boosted unemployment benefits have expired with no replacement in place for now, and that may cause a ripple effect felt by renters, landlords and those who rely on the rental industry.
• Rent prices in urban areas have slowed more than those in suburban areas, a possible signal that renters' preferred location is tilting toward the suburbs.