US pending home sales rose more than expected in March, according to data from the National Association of Realtors.
Zillow Group senior economist Orphe Divounguy joins Wealth with Brad Smith to discuss the uptick in sales, which he credits to price cuts. Divounguy also discusses new data from Zillow that shows half of US states have at least one city where starter homes cost more than $1 million.
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The US pending home sales jumped 6.1% month over month in March. That's according and compared to the 1% growth that was expected. I want to bring in Orphe Divangi, who is the Zillow Group Senior Economist. Orphe, great to speak with you again. I want to know what you make of the latest data.
Look, you know, we we expected it, right? Uh, the big theme here is price cuts sell homes. Uh, when you're looking at where the where the home sales actually exceeded expectations, they're in the south. They're in places where you saw higher, a big increase in inventory, and we're seeing, and we're we're seeing more price cuts. According to Zillow data, uh, potential buyers have 19% more options to choose from when compared to a year ago. And uh, basically we're seeing a record number of price cuts. Uh, roughly 24% of listings had a price cut in March.
And so with this in mind, while the average starter home in the US costs just under $200,000, Zillow found that in 33 cities across 25 states, starter homes now come with a price tag of $1 million or more. That doesn't sound like it's helping out what we've covered and what many economists have been tracking with the affordability crisis and homes. So, how did you define a starter home for the data?
Yeah, of course, a starter home uh, is basically a home at the bottom of our home value distribution. It basically homes in the lowest third of home values. And uh, and it the reality is, look, we expect price growth to continue to moderate as we see more and more homes come return on the on the for sale market. Uh, but essentially the rapid increase in home prices over the past few years really means that a starter home has gotten very expensive. Uh, you're seeing the these homes throughout the country. It's not a California issue alone anymore, right? It's not just California. Uh, half of US states have at least one city with a million dollar or more or higher starter home.
