US Housing Market Challenges Common Perceptions

Despite mortgage rates hitting 23-year highs, the US housing market remains surprisingly competitive, with low inventory levels driving robust demand. Zillow’s latest market report reveals that while depleted inventory is gradually recovering and price appreciation is slowing, resilient demand, especially for appropriately priced listings, is sustaining the market’s strength.

Rising Mortgage Rates:
Mortgage rates neared 8% in October, marking a significant increase. Monthly payments on a typical US home rose 4% from September to October, reaching $1,991; this represents a nearly 10% increase compared to the same period last year and almost double the payments from two years ago. The rate surge has presented challenges, but the housing market continues to demonstrate resilience.

Home Values and Market Trends:
The Zillow Home Value Index indicates that the typical US home value stands at $347,972, reflecting a 2.3% increase from last year. However, a slight monthly decline of 0.3% in October signals a faster deceleration than pre-pandemic norms. Home values saw the most significant decreases in Austin, Minneapolis, and New Orleans, while Miami, San Jose, and San Diego experienced the most effective monthly growth.

Moving Markets

Inventory Dynamics:

New listings decreased by nearly 5% from September, with levels hitting the lowest point for October since 2018. However, the ongoing deficit in new listings gradually shrinks as sellers adjust to higher mortgage rates. The deficit of 1.2% from the previous year is the smallest since May 2022, indicating a positive trend. Although 39% fewer homes are sold than pre-pandemic norms, this marks an improvement from the 46% deficit in May.

Competition and Pricing:

Rising rates and recovering inventory have led to fewer bidding wars, with more sellers adjusting list prices. In October, 25.2% of sellers reduced their list prices, and the share of sales closing above the list price fell from almost 37% in August to 34% in September. However, attractive listings continue to move quickly, with homes typically selling in 16 days, two weeks faster than in 2019.

Metropolitan Insights:

The Zillow report provides:

  • Insights into specific metropolitan areas.
  • Highlighting variations in home values.
  • Inventory changes.
  • Market dynamics.

For example, some markets, including Hartford and Milwaukee, are experiencing annual solid appreciation, while others, like Austin and Las Vegas, face challenges.


Despite the challenges posed by rising mortgage rates and low inventory levels, the US housing market remains surprisingly competitive. The market’s resilience is evident in the ongoing demand for appropriately priced listings and the gradual recovery of inventory. As the housing landscape continues to evolve, stakeholders will need to adapt to changing dynamics to navigate the complexities of the current real estate market.


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