The typical home value breached $350,000 for the first time in June, a new peak in typical values according to a report by Zillow. Redfin shows nearly 92 percent of homeowners have a mortgage rate below 6 percent.
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U.S. home values hit a new high in June as homeowners with low mortgage rates clung to their properties.
The typical home value breached $350,000 for the first time in June, according to a report released Wednesday by Zillow, a new peak in typical values that just slightly eclipses the peak set during July 2022.
Homebuyers remain steadfast in their quest for homes despite rising mortgage rates and prices, while owners are holding on to their homes and lower mortgage rates despite the healthy demand on the buy side. Nearly 92 percent of homeowners have a mortgage rate below 6 percent, according to Redfin data, while the current 30-year fixed mortgage rate sits just south of 7 percent.
“Home buyers have persisted this spring despite daunting affordability challenges and record-low inventory,” Jeff Tucker, senior economist at Zillow said in a statement. “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.”
Month over month, the typical U.S. home value climbed 1.4 percent during June, continuing a four-month hot streak of increases. The new peak of $350,213 is nearly 1 percent higher than the level seen during June 2022, according to Zillow.
New listings ticked up 2.4 percent between May and June, but the annual deficit of listings deepened, with June 2023 logging 28 percent fewer listings than June 2022.
The lack of new listings has dragged down the housing market for over a year now, with 20-year high mortgage rates taking the blame as homeowners balk at listing their homes.
One other possibility is that homeowners are waiting for home prices to grow even higher before they list their homes, Tucker suggested.
“It could be that some homeowners have been waiting until prices set new highs in their market before opting to cash in their chips,” he said.
The total pool of homes for sale was lower than any June since 2018 – down 10 percent from last year and a whopping 45 percent lower than June of 2019.
However, relief could be on the horizon for buyers with a few metrics that indicate lower demand starting to move, according to the report. Sales measured by newly pending listings fell 5 percent between May and June following seasonal trends.
Listings also lasted longer during June with the typical listing sitting on the market for 11 days before pending, compared to 10 in May.