In February, the housing market remained slower than expected, but falling mortgage rates in March could encourage more homebuyer activity. According to housing market platform Zillow's February Market Report, mortgage rates have dropped to their lowest levels since December, making homeownership more affordable and potentially motivating hesitant sellers to list their properties. Despite a slowdown in new listings, today’s buyers have more options, with 1.04 million homes on the market—the highest February inventory since 2020.
With increased supply, buyer competition has eased, and homes are staying on the market longer. On average, homes stayed on the market for 23 days as of February, which is six days more than last year. Home value growth has also slowed to 2.1% year-over-year, the lowest rate in 18 months. While newly pending sales are down 8% from last year, they remain 10% above pre-pandemic levels.
Affordability continues to present a challenge for those who have been waiting to buy a home, but the lower rates we’ve seen so far in March are steadily slicing off portions of monthly mortgage payments. That, combined with flatter home value growth and wage growth that outpaces rent growth means that some long-time savers are likely catching up to a down payment that may have felt out-of-grasp for years.
Rate dips tend to energize buyers and sellers both. We saw evidence of this in August and September. If they continue or hold, we should see more activity. Read more