On average, homes are selling a week faster than they did a year ago, meaning home buyers should be prepared to move quickly in a competitive housing market, according to Zillow’s June Real Estate Market Report.
The report states that tight inventory continues to be a major factor for home shoppers. The supply of homes for sale is nearly 5% below what it was a year ago and 38% below its peak level in 2011. With fewer available options, home buyers are moving quickly to buy homes, with the average U.S. home closing after 78 days on the market, Zillow says.
The 78-day average includes the time it takes to close, which is usually one or two months after the home goes under contract. This means that homes are pending within about a month of being listed.
According to Zillow, the length of time that homes stay on the market before selling has been steadily decreasing since 2010, when homes took an average of five months to sell. The average time home buyers had in Pittsburgh and in Charlotte, N.C., dropped by at least two weeks – the biggest change among the largest U.S. metros.
The low inventory and quick-moving market combine to create a competitive home shopping market, especially for potential buyers looking for less expensive homes. The company asserts that the most expensive third of the market has experienced the smallest drop in available inventory compared with the rest of the market.
“Homes are selling faster than ever as the home shopping season hits its peak,” says Zillow Chief Economist Svenja Gudell. “If you’re looking for a home, be prepared to move quickly. Adding to this difficult buying environment is low inventory – there simply aren’t many homes to choose from. And while this looks like a good time to be a seller, potential move-up buyers may hesitate to list their homes and become buyers. Until the supply increases, it will remain a tough market to find a home.”
The limited supply of homes is driving the increase in home values. The average U.S. home is worth $187,000, a 5.4% increase from June 2015. Home values have been increasing at 5% or faster on an annual basis for the past eight months.
As such, Zillow offers the following tips for buyers in a competitive market:
- Meet with your lender early and get pre-approved for a loan – even before you begin seriously shopping for your new home;
- Work with an agent who has expertise in the local market. Read reviews on local agents, and find someone with a successful record in a tough market; and
- Request to pre-inspect a home before submitting an offer. You risk losing a few hundred dollars if you end up not wanting the house; but if you do, you’ll be able to submit an offer not contingent on home inspections.