Serious interest in buying a home grew more than four times as fast as home sales this spring, a gap Zillow says points to pent-up housing demand.
Engaged shoppers, Zillow users who saved or shared a for-sale listing, reached 4.8 per listing nationally during the second quarter, a 21 percent increase from a year earlier, according to a Zillow analysis. Home sales rose 4.5 percent over the same period. Zillow said engagement increased even as year-over-year inventory grew.
Kara Ng | Credit: Zillow
“This past spring gave us a window into what demand looks like when conditions are even modestly more favorable,” Kara Ng, Zillow senior economist, said in a statement. “With borrowing costs moving back up and economic uncertainty weighing on household decisions, that gap between intent and action has only grown. There is a lot of pent-up demand sitting on the sidelines, and the right conditions could open the floodgates.”
Mortgage rates held at or below 6.5 percent heading into the second quarter, according to the analysis. Zillow said conditions have tightened since then and it expects a weaker-than-anticipated close to the year. The updated engaged-shopper definition excludes agent activity.
Northeast markets see the most competition
The buyer pool is concentrated in the Northeast and Midwest. Buffalo, New York, led the 50 largest metros with 10.5 engaged shoppers per listing, followed by Providence, Rhode Island, at 9.5; Hartford, Connecticut, at 8.5; San Francisco at 7.6; and Cleveland at 7.3.
Zillow tied the Northeast figures to years of underbuilding that have kept inventory tight. The company said buyers in those markets should know their purchasing power and be ready to act when a listing appears.
Sun Belt buyers gain leverage
Houston had the lowest ratio of engaged shoppers to listings at 2.2, followed by Miami at 2.4, San Antonio at 2.9, and Las Vegas and Austin, Texas, at 3.4 each. Zillow said new inventory in Sun Belt markets has given buyers leverage, and sellers there need to price correctly from the start to draw attention.
Several Sun Belt markets posted the fastest growth in engaged homeshoppers. Jacksonville, Florida, led with a 42.9 percent year-over-year increase, followed by Miami at 34.5 percent and Tampa, Florida, at 32.3 percent. Milwaukee was the only metro to decline, falling 0.9 percent.
Luxury and larger homes draw the most interest
Luxury listings, the top 5 percent of home values in a region, drew a median of eight engaged shoppers per listing, compared with 2.7 for bottom-tier homes in the 5th to 35th percentile. Luxury engagement grew 25.7 percent year over year, while bottom-tier engagement grew 8.6 percent.
Listings with four or more bedrooms attracted 6.6 engaged shoppers per listing, compared with 3.5 for two-bedroom homes, according to the analysis.
By the numbers
- 4.8: Engaged shoppers per listing nationally in the second quarter
- 21.4 percent: Year-over-year increase in engaged shoppers nationally
- 4.5 percent: Year-over-year increase in home sales over the same period
- 10.5: Engaged shoppers per listing in Buffalo, the highest of the 50 largest metros
- 2.2: Engaged shoppers per listing in Houston, the lowest of the 50 largest metros
- 42.9 percent: Growth in engaged shoppers in Jacksonville, the largest increase of any metro
- -0.9 percent: Change in engaged shoppers in Milwaukee, the only metro to decline
- 8: Median engaged shoppers per luxury listing
- 2.7: Median engaged shoppers per bottom-tier listing
- 6.6: Engaged shoppers per listing for homes with four or more bedrooms
Source: Zillow
