Monthly home value appreciation accelerated for the first time since July as potential buyers continue to outnumber new listings, driving December inventory to an all-time low, according to Zillow’s latest market report.
“Home shoppers picked the shelves clean this December, leaving fewer active listings than ever before in the U.S. housing market,” said Jeff Tucker, senior economist at Zillow.
“Enough determined buyers kept up their house hunt to reignite monthly price appreciation. Rising mortgage rates could be the next potential headwind, but demand has proven persistent; neither high prices nor slim inventories have deterred buyers so far.”
The typical home value is now $320,662, 19.6% above that of December 2020 and a record high for Zillow’s data, which dates back more than 20 years. Month-over-month appreciation rose from 1.2% to 1.4% in December.
Inventory dropped 11.1% just from November to December, to a record low of 923,000 homes. It is a 19.5% drop year-over-year, and down 40.5% from December 2019. Newly listed inventory fell 18.9% month-over-month, the largest drop in the last three years.
“Home sales are slumping, but not for lack of demand,” Redfin Chief Economist Daryl Fairweather said.
“There are plenty of homebuyers on the hunt, but there is just nothing for sale. In many markets, shopping for a home feels like going to the grocery store only to find the shelves bare. In January, I expect to see more buyers and sellers in the market, but demand will increase more than supply– pushing prices higher at the start of this year.”
The Omicron variant surge could have added to the shortage, as homeowners who may have otherwise listed might be waiting for infection rates to slow.
Uncertainty around in-person work may also be at play. Many employers are pushing back their in-office start dates, which could cause homeowners to pause their plans. A recent survey from The Partnership for New York City found that 75% of major Manhattan employers delayed their return to work due to Omicron.
Workers whose employers have already solidified post-pandemic work arrangements are more likely to say they are considering a move within the next three years, Zillow says.