As the market rebalances, home buyers have more options, more time to shop and more negotiating power.

After two years of unprecedented growth, home values fell slightly from June to July, according to the latest market report from Zillow. The market is quickly rebalancing, gradually returning back to pre-pandemic norms with buyers' purchasing power being diminished by nearly two years of double-digit price growth and higher mortgage rates — resulting in competition for homes dropping off. The typical U.S. home value declined by 0.1% — or $366 — month-over-month in July and now stands at $357,107, as measured by the raw Zillow Home Value Index (ZHVI). Monthly growth in this metric has relaxed since reaching a recent peak of 1.9% in April, slowing to 1.2% growth in May and 0.8% growth in June. It's not unusual for home price growth to decelerate this time of year, but the small decline is the first monthly dip since 2012. The nation's typical home value is up 16% year-over-year and 44.5% since July 2019.

"Home values flattening so quickly after recent record growth might surprise, but it's a badly needed rebalancing that gives home buyers more options, more time to shop and more negotiating power," said Zillow Chief Economist Skylar Olsen. "This slowdown is about discouraged buyers pulling back after the affordability shock from higher rates. As prices soften, many will renew their interest, and we will continue our progress back to 'normal.' With buyers ready in the wings once confidence returns, homeowners can expect to keep the majority of the equity gains they've seen in the last two years." Home values measured by raw ZHVI fell from June to July in 30 of the 50 largest metro areas, an increase from 13 the previous month. Home shoppers still on the hunt have more time to find and consider their options and have a better chance of seeing price cuts. Listings' median days to pending jumped by two days in July to 10 — still nearly two weeks less than in July 2019.

Source: MReport