House Inventory to Return to Pre-Pandemic Levels by 2024, New Zillow Survey Says
Homebuyers will need to arm themselves with a little more patience, as the housing market — in terms of inventory and the share of purchases made by first-time buyers — is expected to return to pre-pandemic levels by 2024, according to a Zillow Home Price Expectations Survey of housing market experts and economists.
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The dwindling supply of homes for sale has been a key driver of the recent explosion in U.S. home values, which have risen 32% in the past two years, according to Zillow.
Total inventory has fallen to a monthly average of 1 million in 2021, from a monthly average of 1.6 million units in 2018 and 2019, while monthly figures in 2022 are still lower.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” Zillow senior economist Jeff Tucker said in a press release. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
Zillow said that 38% of respondents expect inventory to return to a monthly average of 1.5 million units or higher in 2024, while 36% said supply will bounce back to pre-pandemic levels in 2023, and 12% said it will be by 2025.
A combination of rent hikes and low inventory made saving for down payments more difficult, in turn, the share of first-time homebuyers dropped to 37% in 2021, from 45% in 2019. Now, 26% of experts Zillow polled said that first-time homebuyers should regain their pre-pandemic share of the market in a couple of years in 2024, while 18% did not believe the share of first-time buyers will rise above 45% until after 2030, despite millennials — the largest U.S. generation ever — aging well into their prime home-buying years before that time.
In terms of home price growth projections, research firm Pulsenomics said the panel’s average projections for home price growth in 2022 have been revised upward, from 6.6% three months ago to 9% in this survey.
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“Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year,” Pulsenomics founder Terry Loebs said in the release. “If price increases this year for homes, rents, energy, and food each exceed wage growth – as the panel expects – home affordability challenges will intensify further, especially for low- and moderate-income renters.”
Zillow economists forecast a 16.3% rise in typical home values from February through December.
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