Inventory Growth Has a Long Road to Market Balance

Housing inventory displayed significant recovery for the second straight month in June, indicating that the market may be on the road to rebalancing after a long stint of being heavily in sellers’ favor, according to the latest Zillow Real Estate Market Report. But inventory remains low and demand is still strong, sending home value appreciation to new record highs for both monthly and annual growth.

Intense demand for houses during the pandemic sent inventory plummeting to a low of 33 percent below that for April of the prior year, ramping up competition for houses and elevating prices. But inventory has begun to recover since then, with a 3.1 percent improvement in June following a 3.9 percent increase in May. Inventory now stands at 29.2 percent below 2020 levels.

“Another month of rising housing inventory gives buyers some additional options and a little more bargaining power,” said Jeff Tucker, senior economist at Zillow. “While the level of inventory remains incredibly low by historic norms, it is now on a trajectory that should give buyers reason to hope for a cooldown in price growth this winter, consistent with normal seasonal trends.”

Home value appreciation broke annual records for the second month in a row, notching 15 percent growth from last year — the highest in Zillow data reaching back through 1996. The Zillow Home Value Index reached $293,349, up $38,341 compared to last June.