Time on market drops 6 days, home values break new records

It can’t last forever, that’s what long-time real estate professionals are saying about this market. And, it looks like they may be correct. While home values are breaking records, there’s been a slight bump in inventory, says a new report.

Continued growth in the housing market paired with a long-awaited bump in inventory in May, according to Zillow’s® latest Market Report. Home value appreciation continues to break records and typical time on market is down to just six days.

A recent survey found that 82% of homeowners who sold in the last six months accepted offers at listing price (33%) or above (49%), nearly half of them sold in less than a month, and a quarter of them had five or fewer showings before finding a buyer — reflecting both the low supply of available homes and the rush to buy when new listings hit the market.

Inventory is finally showing signs of recovery at the national level after nearly a year of steady decline. The 3.9% month-over-month gain in May is the first uptick since July 2020 and only the fifth seen in the last 24 months. Of the top-50 largest U.S. markets, only six saw inventory fall from April. Inventory across the U.S. is down 31.2% since May 2020, an improvement over the 32.8% annual decline seen in April. New inventory has trended up since mid-March. 

However, the typical time for a newly listed home to go under contract dropped to just six days nationwide, one day shorter than in April. Time on market is the shortest at three days in hot Midwest metros of Cincinnati, Kansas City and Columbus. 

CoreLogic® released the Homeowner Equity Report for the first quarter of 2021. The report shows U.S. homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020. 

While the coronavirus pandemic created economic uncertainty for many, the continued acceleration in home prices over the last year has meant existing homeowners saw a notable boost in home equity. The accumulation of equity has become critically important to homeowners deciding on their post-forbearance options.

In contrast to the financial crisis, when many borrowers were underwater and home values dropped, borrowers today who are behind on mortgage payments can tap into their equity and sell their home rather than lose it through foreclosure. These conditions are reflected in a recent CoreLogic survey, with 74% of current homeowners with mortgages noting they are not concerned with owing more on their home than it is worth within the next five years.  

Annual home appreciation reached 13.2% in May while monthly growth was 1.7%, both of which are new records within Zillow data reaching back through 1996. Typical home values now stand at $287,148. Month over month growth accelerated in 47 of the 50 largest U.S. markets and decelerated in just three — roughly matching the local market heat in April. 

Austin retained its lead in annual appreciation with a blistering 30.5% increase over 2020, followed by Phoenix (23.5%) and Salt Lake City(20.6%). Even the metros with the lowest annual appreciation — Orlando, New Orleans and Oklahoma City — still put up historically strong numbers above 9%. 

Zillow economists forecast home values to increase by 14.9% by May 2022, an upward revision from the April forecast. Home sales are expected to reach 5.91 million in 2021, a 4.8% increase over 2020.