However, some markets are bucking that trend with rising home values
of ConsumerAffairsApril 21, 2025
Key takeaways
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Home values nearly stood still, rising 0.2% during a month normally characterized by high growth.
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New shoppers have 19% more options to choose from than a year ago, and a rising share of homes have been on the market for more than a month.
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Sellers cut prices on a record-high 23.5% of listings on Zillow.
In a surprising twist for what is typically a hot season in real estate, the U.S. housing market has hit a significant slowdown. According to Zillow’s latest market report, home values barely budged in March while inventory saw a significant upswing, signaling a shift in market dynamics despite falling mortgage rates.
March, historically one of the busiest months for homebuying, saw home values rise just 0.2% month-over-month the slowest growth for this time of year since at least 2018. On a year-over-year basis, home prices are up a modest 1.2%. By contrast, in more typical years, March would deliver robust price growth amid heavy buyer competition.
While five metro areas including the four major markets in Florida and San Antonio actually saw month-over-month declines, others such as San Jose, Milwaukee, and Hartford managed the strongest growth, with San Jose leading at a 1.3% monthly uptick.
Inventory reaches pandemic-era highs
More homes are hitting the market, but not enough buyers are biting. Nearly 375,000 homes were listed for sale in March, up 8.5% from a year ago, but newly pending sales remained nearly flat. The result? Inventory ballooned to 1.15 million homes a 19% increase from last year, offering house hunters the most selection in a March since 2020.
Even with this improvement, inventory remains 24% below 20182019 norms. However, the gap is closing rapidly; just last year, March inventory was down 43% from pre-pandemic levels.
Lower mortgage rates averaging 6.65% in March, compared to 6.82% a year earlier did little to energize buyers. Affordability remains a top concern, particularly for first-time buyers. A typical mortgage now eats up about 35.3% of a median household’s income, and with a 20% down payment on the median U.S. home approaching $72,000, the financial hurdles remain steep.
Zillow Chief Economist Skylar Olsen notes that economic uncertainty may be weighing most heavily on new buyers, who lack the equity many sellers bring to the table. “More sellers came out to test their luck as rates ticked down in March, but home sales didnt keep up,” Olsen said in a statement.
Price cuts on the rise
In response to tepid demand, a record 23.5% of sellers slashed prices on Zillow the highest share of March price reductions since the company began tracking. This growing trend indicates that sellers are adjusting expectations to meet cautious buyers in the middle.
Heres how some markets break down:
Los Angeles: Inventory jumped 42%, and prices rose 0.5% month-over-month.
New York: Home values climbed 0.4%, with inventory slightly down 3.3% year-over-year.
Miami: Home values fell by 0.4%, and newly pending sales plunged 14%.
San Francisco: Recorded a solid 0.9% monthly price growth, despite a 33.6% inventory surge.
Austin: Despite a 4.6% yearly price drop, home values ticked up slightly in March (0.2%), with new listings up just 3.3%.
Looking Ahead
As spring unfolds, the housing market appears to be recalibrating. Increased inventory and slower price growth offer a glimmer of hope for prospective buyers, but affordability remains a major hurdle. The tug-of-war between eager sellers and hesitant buyers could define the months ahead, with interest rates and economic sentiment likely tipping the scales.
Whether this cooling trend continues or rebounds may depend on future economic indicators and the trajectory of mortgage rates in the coming months.
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