3 reasons why the 2024 housing market is more active than before the pandemic

The frozen housing market has more competition than pre-pandemic. Getty Images/Matt Champlin

Low inventory levels, high mortgage rates, and rising home prices have left the U.S. housing market frozen for the past year. But a new Zillow report suggests that the housing market today is actually more active than it was before the pandemic—even with inventory levels bottoming out in late 2023.

Competition has cooled significantly since pandemic peaks, Zillow says, but it’s still hotter than pre-pandemic norms, with homes selling at a faster rate. That’s largely due to a lack of available inventory, Orphe Divounguy, Zillow senior economist, tells Fortune. 

“Inventory is slowly increasing, but remains relatively low,” he says. “This means buyers have fewer options and homes are going under contract 50% faster than pre-pandemic norms.” Today’s 6% mortgage rate will “tamp down competition” for houses than when buyers were vying to purchase at sub-4% rates during the pandemic, he adds, but it won’t completely eliminate it.

Although high mortgage rates and home prices are locking out some homebuyers, there are three ways that the housing market is still more active than it was before the pandemic, Zillow argues.

1 – Homes are selling much faster than before the pandemic

Remember the pandemic-era housing market when homes were flying off the market in just a number of days? While today’s market isn’t moving quite that fast, it’s still going at a quicker pace than before 2020. 

Listings that sell are going under contract in a median of 30 days, Divounguy says. That’s one day less than last year and 50% faster than the pre-pandemic median of 45 days, he adds. In December 2021, buyers snatched listings in just 13 days. 

“Homes are selling quicker than pre-pandemic norms largely due to low inventory levels and pent-up buyer demand,” Divounguy says. But buyers who were “sidelined” by 8% mortgage rates are “likely to resume their search” as rates continue to drop this year, he adds. 

2 – Limited inventory means stiffer competition

Around the time that mortgage rates peaked at 8%, existing-home sales plummeted a stunning 15% in September 2023 on a year-over-year basis to a seasonally adjusted annual rate of 3.96 million transactions, according to the National Association of Realtors (NAR). That was the lowest figure since the world economy and U.S. housing market were emerging from the Great Financial Crisis in 2010.

“Although supply has also improved somewhat, changes in mortgage rates have a larger impact on demand than on supply,” Divounguy says. “As a result, competition among buyers remains stiff.”

While purchases are happening at a faster pace than before the pandemic, the lack of supply means that there are fewer housing transactions overall, Divounguy says. In fact, inventory levels are 36% lower than pre-pandemic levels, “a…