A report from real estate company Zillow reveals that the average American home is only staying on the market for six days.
The analysis shows that rising rents, for-sale inventory, and higher purchasing prices characterize the American housing market.
As Zillow explains:
The combination of tight supply and high demand is doing more than just pushing home values up at a record pace — it is also helping push the amount of time homes spend on the market before selling to record lows. The typical time for a newly listed home to go under contract dropped to just six days nationwide in May, one day shorter than in April.
Some housing markets are especially tight: “At just three days, typical time on market is shortest in the hot Midwest metros of Cincinnati, Kansas City and Columbus.”
Inventory of homes available for purchase is down by 31.2% from one year ago — the fourth consecutive month of year-over-year drops in inventory that exceed 30%. Only three cities — San Jose, San Francisco, and Milwaukee — saw upticks in inventory.
The month of May brought a “long-awaited bump” in available homes; however, the new offerings “did little to immediately cool record-high home value appreciation.” The Zillow Home Value Index reveals that as of May, the average American home value has grown year-over-year by 13.2%.
Zillow sees no end in sight to the low-supply, high-demand housing market:
The rapid home price appreciation that has marked the past year in housing is not expected to let up any time soon, though affordability concerns and continued low inventory are putting somewhat of a damper on the outlook for sales, according to the latest Zillow home value and sales forecasts.
Zillow economists expect home values to increase 6.1% over the next quarter (May-August), by 17.9% through the end of this year (December 2020-December 2021) and by 14.9% through the twelve months ending in May 2022. The latest forecast is an upward revision from last month, when we predicted 11.4% year-over-year growth in April 2022. This month’s forecast was boosted, in part, by record short-term appreciation of the past few months, which shows virtually no signs of slowing as sky-high demand runs headlong into inadequate supply.
Larry Summers — a progressive economist who served in the Obama and Clinton administrations — recently decried the Federal Reserve’s quantitative easing efforts for contributing to the distortions in the housing market.
“We’ve got houses, a housing market in an incredible place,” Summers told PBS’s Margaret Hoover. “For the first time since they started having these statistics, the majority of houses are selling above their asking price. Why in the face of a housing market on fire should the Fed be intervening in the markets to buy up mortgage-backed securities and subsidized mortgages? Seems like that’s adding gasoline.”