The housing market saw a pronounced buyer-seller mismatch last month, and it’s proving difficult to draw prospective home buyers off of the sidelines, according to Zillow.
That could spell good news on the housing-affordability front. Buyers holding back from buying a home due to cost concerns could eventually prompt price cuts, and just in time for one of the hottest home-buying seasons of the year.
Sellers put more than 375,000 homes on the market last month, a 32% increase from last month and a 9% increase compared to levels recorded the same month last year, according to a report Zillow released on Monday.
But buyers haven’t been keeping pace with the growth in new listings. Pending home sales for the month remained flat compared to last year’s levels, with just 265,000 listings transitioning into a pending sale in March.
That means the housing market added a net 110,000 listings last month, pushing overall inventory up 19% year-over-year to 1.15 million, Zillow estimated.
That’s the most inventory the market has seen since March 2020, when the pandemic pushed the housing market into a near-standstill, according to Skylar Olsen, the chief economist at Zillow.
“Home price growth paused and inventory swelled during what is typically one of the most competitive home shopping months of the year. That’s despite mortgage rates reaching a 2025 low in March,” Olsen wrote in the note. “While sellers leaned on the gas, buyers didn’t keep up,” she added.
Olsen said buyers may have been held back by affordability concerns, with high home prices keeping mortgage payments elevated.
The typical mortgage payment, assuming a 20% down payment on a home, cost around 25% of the median US household income in March, Zillow estimated, outside the recommended guideline to keep housing costs under 30% of one’s total income.
Sellers have already started to give in to pressure to slash home prices. with 23% of listings on Zillow seeing a price reduction over March. That’s the largest share of homes with a price cut since 2018, and up slightly from last month’s share, when 21% of homes on Zillow had a price cut, the firm said.
That said, the housing market has been tipped towards sellers’ favor for most of the last five years. Zillow’s Market Heat Index, which shows whether the housing market is more favorable to buyers or sellers, moved from “neutral” territory to “sellers market” territory in March, the first time it’s done so since June of last year.
