Two years in: Housing market transformed by prices, lack of inventory

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Mar 17, 2022, 08:00 ET

A sea change in housing has occurred over the course of the pandemic, but demand remains strong

Inventory fell in February, breaking with past yearly trends, and now stands at 48% below 2020.
Home value appreciation is quickly increasing, making the typical home worth 32% more than in 2020.
Rent prices have reversed from a cooling trend; a one-year lease now would cost nearly $3,400 more than one signed two years ago.
Zillow expects appreciation to peak at 22% in May before returning to 17% by February 2023.

SEATTLE, March 17, 2022 /PRNewswire/ -- Two years into the pandemic, the U.S. housing market is virtually unrecognizable from its previous state, with nearly half the number of homes for sale, prices higher by one-third and rising, and rents hundreds of dollars more a month, Zillow^®'s latest monthly market report¹ shows.

None of that has curtailed demand, with listed properties flying off the market and sales stronger than before the pandemic.

Zillow logo (PRNewsfoto/Zillow Group)

"We've seen strong demand for homes and prices rising at previously unfathomable rates. A wave of millennial and baby boomer buyers have depleted housing inventory that was never really replenished following the Great Recession," said Zillow economist Nicole Bachaud.

Lack of inventory is driving these historic price hikes. There are roughly 730,000 houses currently for sale in the U.S., compared to 1.4 million in February 2020.

Historically, inventory has generally bottomed out in December and then rebounded as sellers listed their houses in preparation for prime spring shopping season. This year, supply continues to dwindle into the new year. Total inventory in February is 11.9% lower than in January.

Of the 50 largest U.S. metros, those with the largest inventory deficit since 2020 are Raleigh (-69.7%), Hartford (-63%), Providence (-61.8%) and Miami (-61%). Those seeing the smallest decrease are San Francisco (-7.8%), San Jose (-17.9%) and Austin (-26.9%).

The typical U.S. home value is now $331,533, up 32.4%, or $81,000, compared to February 2020, and is 20.3% higher than last year — another in a long line of new records for annual appreciation. February 2020 presented a much more standard 3.7% annual growth.

The rate at which prices are rising is accelerating as well, with month over month appreciation up to 1.6%, up from a low of 1.2% in November.

"Builders are working feverishly to get new construction and move-in ready homes on the market, but it's going to take time for inventory to rise enough to curb runaway price growth," Bachaud said. "Homeowners may be worried about rising interest rates, since they make a new mortgage considerably more expensive. But many of them are sitting on a large sum of equity that could sway them to get off the fence, bringing new inventory to the market this spring."

Looking ahead, Zillow economists expect annual home value growth to continue to accelerate through the spring, peaking at 22% in May before gradually slowing to 17.8% by February 2023. Sales in 2022 are forecast to rise 4.8% above those in 2021, which was the best year for sales since 2006.

Extremely strong demand finds that the houses that do get listed are scooped up in just 11 days, six days faster than in February 2021 and a full 25 days faster than in 2020.

Despite the challenging shopping environment, sales are still brisk for this time of year. More homes transacted last month than in either February 2019 or February 2020, though sales are 11% lower than in 2021. Sales generally slow through March before taking off in April, and the data shows that now.

Rent prices reversed from a cooling trend in January, shooting up 1.1% from last month and 17% from last year. Typical rent across the U.S. is now $1,883 per month, $283 per month higher than in February 2020. Rent growth was slow in 2020 after the outbreak of the pandemic, but it skyrocketed in 2021.

The largest monthly rent hikes among major metros were in Buffalo (2.3%), New Orleans (2.2%) and Miami (1.9%). Only Las Vegas and Birmingham saw monthly declines, at 0.3% and 0.2%, respectively.

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI – Change Since Feb. 2020	ZHVI – Month- over- Month Change	Median Days to Pending	Inventory– Change since Feb. 2020	Zillow Observed Rent Index (ZORI)	ZORI – Change Since Feb. 2020
United States	$331,533	32.4%	1.6%	11	-47.7%	$1,883	17.6%
New York, NY	$582,684	21.3%	0.8%	37	-45.0%	$2,860	8.3%
Los Angeles– Long Beach– Anaheim, CA	$892,558	30.4%	1.4%	12	-40.1%	$2,816	13.6%
Chicago, IL	$296,053	22.3%	0.9%	19	-49.3%	$1,797	8.1%
Dallas–Fort Worth, TX	$361,270	39.6%	2.4%	16	-47.3%	$1,699	21.4%
Philadelphia, PA	$318,035	26.6%	0.8%	13	-40.7%	$1,742	12.8%
Houston, TX	$287,957	29.6%	1.5%	13	-43.0%	$1,518	12.6%
Washington, D.C.	$536,402	21.9%	0.9%	8	-34.8%	$2,120	7.6%
Miami–Fort Lauderdale, FL	$410,781	34.7%	1.9%	17	-61.0%	$2,871	36.9%
Atlanta, GA	$353,691	43.1%	2.0%	9	-52.1%	$1,867	28.4%
Boston, MA	$624,600	25.8%	1.2%	9	-50.6%	$2,702	5.5%
San Francisco, CA	$1,426,520	25.8%	1.6%	11	-7.8%	$3,084	0.7%
Detroit, MI	$232,216	27.8%	1.2%	11	-43.1%	$1,371	19.0%
Riverside, CA	$555,853	43.6%	2.1%	12	-45.9%	$2,537	31.0%
Phoenix, AZ	$442,976	55.3%	2.0%	12	-28.3%	$1,884	35.4%
Seattle, WA	$747,353	39.9%	1.8%	5	-33.7%	$2,160	11.4%
Minneapolis– St. Paul, MN	$363,306	22.7%	1.0%	18	-32.2%	$1,596	7.3%
San Diego, CA	$880,414	44.0%	2.4%	7	-47.2%	$2,778	22.4%
St. Louis, MO	$230,414	25.7%	1.4%	7	-50.7%	$1,214	15.2%
Tampa, FL	$341,997	49.7%	2.3%	6	-54.5%	$1,999	37.1%
Baltimore, MD	$360,956	21.6%	0.9%	10	-46.7%	$1,769	14.1%
Denver, CO	$614,138	35.9%	1.9%	5	-58.4%	$1,885	15.1%
Pittsburgh, PA	$206,604	26.8%	1.4%	25	-40.9%	$1,310	10.1%
Portland, OR	$558,513	31.4%	1.5%	7	-43.2%	$1,796	14.2%
Charlotte, NC	$353,106	43.7%	2.2%	5	-47.9%	$1,719	23.1%
Sacramento, CA	$595,005	36.7%	1.6%	8	-35.4%	$2,212	20.5%
San Antonio, TX	$315,208	33.5%	1.7%	13	-49.1%	$1,396	18.8%
Orlando, FL	$354,569	37.0%	2.2%	7	-44.1%	$1,905	26.8%
Cincinnati, OH	$246,825	30.6%	1.2%	5	-40.7%	$1,419	15.5%
Cleveland, OH	$204,808	29.2%	1.2%	11	-59.6%	$1,257	15.2%
Kansas City, MO	$273,455	30.8%	1.8%	5	-39.1%	$1,256	16.0%
Las Vegas, NV	$416,647	41.9%	2.5%	8	-42.1%	$1,805	32.9%
Columbus, OH	$279,883	29.5%	1.4%	4	-35.3%	$1,377	16.4%
Indianapolis, IN	$254,810	35.2%	1.8%	5	-33.2%	$1,396	20.8%
San Jose, CA	$1,629,819	29.7%	2.5%	12	-17.9%	$3,059	1.7%
Austin, TX	$573,123	68.6%	2.5%	22	-26.9%	$1,798	22.1%
Virginia Beach, VA	$308,186	25.3%	1.0%	19	-48.0%	$1,538	19.9%
Nashville, TN	$416,472	43.1%	2.6%	5		$1,774	22.6%
Providence, RI	$426,226	32.9%	1.0%	12	-61.8%	$1,809	23.2%
Milwaukee, WI	$257,144	25.8%	1.0%	34	-48.6%	$1,179	10.5%
Jacksonville, FL	$334,960	43.1%	2.3%	8	-53.2%	$1,719	30.6%
Memphis, TN	$216,710	34.9%	1.8%	16	-39.0%	$1,478	26.8%
Oklahoma City, OK	$204,073	26.6%	1.4%	6	-41.3%	$1,271	16.5%
Louisville–Jefferson County, KY	$230,178	25.1%	1.1%	8	-35.7%	$1,196	14.9%
Hartford, CT	$302,469	27.1%	0.9%	15	-63.0%	$1,546	14.7%
Richmond, VA	$313,876	24.7%	1.1%	6	-46.3%	$1,487	17.8%
New Orleans, LA	$258,775	23.6%	1.1%	8	-49.8%	$1,492	22.2%
Buffalo, NY	$230,368	31.0%	1.0%	12	-47.6%	$1,132	15.7%
Raleigh, NC	$420,228	46.3%	2.6%	5	-69.7%	$1,672	22.4%
Birmingham, AL	$227,149	29.4%	1.4%	8	-44.4%	$1,279	16.7%
Salt Lake City, UT	$575,579	47.9%	2.6%	7	-57.7%	$1,629	24.0%
*Table ordered by market size

¹ The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Report are aggregated from public sources by a number of data providers for 931 metropolitan and micropolitan areas, dating back to 2000. All current monthly data at the national, state, metro, city, ZIP code and neighborhood levels can be accessed at www.zillow.com/research/data.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow^® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease.

Zillow Group's affiliates and subsidiaries include Zillow^®, Zillow Offers^®, Zillow Premier Agent^®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia^®, Out East^®, ShowingTime^®, Bridge Interactive^®, dotloop^®, StreetEasy^® and HotPads^®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

SOURCE Zillow