Low Inventory and Price Gains Could Pose Challenges for Spring Shoppers

Home value appreciation rose to a record annual gain of 19.9% in January as inventory dropped to a record low of 900,000 total listings, a 42.4% decline from January 2020, Zillow reports. In a typically stagnant season for home buying, increased demand coupled with elevated home value growth led to a heated midwinter market, and buyers aren’t slowing down ahead of another likely peak in spring.

As home prices continue to climb and limited inventory boosts competition, a slight market deceleration could offer some relief for buyers who need extra time to assess their options. The spring shopping season will hinge on seller activity and the rate of new home construction amid a nationwide housing shortage.

Similar to December, if there is one small silver lining for frenzied would-be homebuyers contending with rapid home value appreciation and limited inventory, it’s that the speed of the market has gradually slowed down since reaching a peak early last summer – and appears to have stabilized for now. In June, the typical U.S. home spent just one week on the market before going under agreement. That time frame rose to roughly 13 days in December and January. It’s worth noting that homes typically take longer to sell in the fall and winter months as back-to-school, shorter days and the holiday season all tend to eat into both buyers’ and sellers’ schedules.

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