Market Momentum Builds Amid Challenges
The US housing market showed clear signs of acceleration in March, bucking headwinds from elevated mortgage rates that eroded some recent affordability improvements, according to Zillow's latest market report. Newly pending home listings climbed 4.6% compared to March last year, marking a robust start to the home shopping season. This uptick pushed the total to the second-largest monthly figure since the post-pandemic peak in August 2022, which Zillow views as a positive indicator as spring buying ramps up.
Despite mortgage rates rising from 5.98% at the end of February to 6.38% by late March—based on Freddie Mac data—the market pressed forward. Excluding taxes and insurance, the typical mortgage payment edged up 1.5% from February levels, tempering the affordability relief seen earlier. Still, the overall monthly payment on a typical US home came in at $1,789 with a 20% down payment, down 4.4% from the prior year.
Inventory and Sales Figures Climb
Inventory levels continued to expand, with 1.23 million homes listed for sale in March—a 9.5% jump from February and 4.2% higher than a year earlier. New for-sale listings totaled 384,854, reflecting a modest 0.1% year-over-year gain but a sharp 35.6% increase from February's figures.
Pending listings, which track homes shifting from active to under-contract status, grew 4.6% annually and surged 29.8% from the previous month. Preliminary data from Zillow's sales nowcast showed 300,398 homes sold in March, up 3.7% from last year and 25.2% month-over-month, though these numbers remain subject to mid-month revisions.
Key Inventory and Sales Metrics
- Active inventory: 1.23 million homes, +9.5% MoM, +4.2% YoY
- New listings: 384,854, +0.1% YoY, +35.6% MoM
- Pending listings: +4.6% YoY, +29.8% MoM
- Home sales: 300,398, +3.7% YoY, +25.2% MoM
- Typical payment: $1,789, -4.4% YoY
Buyers and sellers have been navigating uncertainty and market volatility in some form since the onset of the pandemic, and this month’s concern over energy prices is no different. However, we have persistent signals that the market has turned a corner. Pent-up demand from three years of low sales volume and winter storms in January and February, along with the tailwind from lower mortgage rates earlier in the year, seem to have buoyed the market as home shopping season kicked off. In particular, the rapid acceleration of daily page views per listing we saw in March was a noteworthy improvement over the dormant market of recent years.
Underlying Drivers and Outlook
Zillow attributes the March surge to pent-up demand accumulated over three years of subdued sales, compounded by winter weather disruptions in early 2023 and a brief dip in rates earlier in the year. Daily page views per listing accelerated notably, signaling heightened buyer interest after periods of market dormancy.
While affordability pressures persist with rates hovering above 6%, the inventory buildup and sales growth suggest the market is adapting. Sellers appear more willing to list amid seasonal momentum, and buyers are responding despite higher borrowing costs. As the housing season unfolds, these trends could solidify if inventory continues to expand and rates stabilize.
