Sellers took a step back from the housing market in August in response to slow demand from cash-strapped home shoppers, according to the latest market report¹  from Zillow®. 

Buyers still in the market have plenty of opportunity, especially in areas seeing inventory hold strong. But competitive momentum that has been swinging fast in buyers' favor in recent months is showing signs of stopping nationwide.

"Buyers who can afford a home and have been waiting for the right moment should look closely at what's available now," said Zillow Senior Economist Kara Ng. "Options are on the shelves, even if they're not all fresh. Sidelined buyers should revisit their budget; mortgage rates are lower than recent years, and in some markets, sellers are more willing to deal. But don't expect this window of opportunity to stay open indefinitely. Buyers' leverage is easing as many sellers put their plans to list on hold."  

Market dynamics: Sellers respond to cautious buyers

High housing costs continue to sideline many prospective buyers, making it easier for those still in the hunt. Zillow's market heat index shows the market is balanced between buyers and sellers nationwide, with less competition among buyers than in any August since 2018. 

As a result, home value appreciation has slowed to a standstill. Typical home value growth nationwide measured by Zillow's Home Value Index is now flat over the past year — the second-slowest annual growth of any month since the start of 2018. 

Listings are taking longer to sell, too. The typical home sold in August took 27 days to find a buyer — a full week longer than last year and one day longer than  pre-pandemic norms. But contrary to typical seasonal trends, competition ticked back up slightly in late summer. 

Homeowners have responded to buyers' caution by pushing pause on listing plans. New listings from sellers reached a record low for August in Zillow records, and the 7.3% month-over-month drop in new listings is steeper than normal for this time of year. 

Potential sellers are probably comfortable with their home for the present, likely enjoying a low mortgage rate and significant equity growth: Typical home values nationwide are up 46.5% since February 2020.  

According to Zillow's latest survey of recent sellers, 37% were encouraged to sell by accepting a new job.  As the labor market weakens, that could also reduce the number of homeowners needing to sell. This slowdown in new listing activity caused overall inventory levels to shrink, falling 1.3% from their July peak.

Regional divides: A tale of two markets
National trends mask significant regional differences, where shifts in supply have impacted competition. 

• Buyer-friendly markets: Buyers have the most leverage in the South. Former pandemic-era hot spots such as Miami, Tampa, Jacksonville, and Austin now all have more existing options on the market than before the pandemic, thanks in part to builders' efforts to meet demand. Seattlehas made a surprising transition from favoring sellers to buyers over the past year — inventory that's risen 22% over that time played a key role. 
• Seller-friendly markets: The Northeast and the San Francisco Bay Area remain firmly in favor of sellers. Competition is strongest in Buffalo, Hartford, San Francisco, San Jose, and Boston. In these supply-constrained regions, inventory remains far below pre-pandemic averages, keeping the market tilted toward sellers.