In November, the number of homes on the market inched forward 0.2% from the previous month, according to Zillow.

Notably, this is an increase of 0.4% year-over-year, marking the third consecutive month of modest gains.

"Low housing inventory, a major contributor to a run-up in home prices in recent years, has risen for three consecutive months – but it is climbing at a slow rate, more akin to bumping along the bottom than growing in any meaningful way,” Zillow writes.

Zillow’s inventory report revealed that there were 1.6 million homes on the market in November, significantly lower than the 1.96 million in December 2014.

According to Zillow’s analysis, 675,823 homes were for sale in the top third of the market, compared to 334,857 in the bottom third. This has left many prospective buyers grappling with affordability.

It’s worth noting that inventory fell in 11 of the nation’s 35 largest metros, declining the furthest in Kansas City, Missouri. In this city, the number of homes for sale fell 14.9%.

“Sluggish inventory growth likely was influenced by a spike in mortgage rates in November, when rates hit their highest level since 2011,” Zillow continues.” Higher rates can keep potential sellers at home, not wanting to trade into higher-rate mortgages. Rising rates also give some buyers pause, because they increase monthly mortgage payments.”

Zillow points out that the median U.S. home value climbed 7.7% in November. However, expensive metros, which until recently clocked some of the fastest rising home values, are now growing at a slower rate.

In fact, the median home value in San Jose rose 11.2%, to $1.25 million in November, coming in as the highest median value among the largest 35 markets. Unfortunately, Zillow notes that the pace of appreciation still fell far below the 20% annual growth that occurred seven months this year.

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