It's not more sellers driving inventory growth but weak demand

Total inventory of homes available for sale across the US increased in March for the seventh straight month.

But the 1.2% year-over-year rise is not due to more sellers becoming active as the weather improves, it’s weak demand for available homes according to Zillow.

The firm’s analysis found that new listings were down 6.6% year-over-year last month, the fourth consecutive monthly decline; and homes were staying on the market for longer – a median 4 days extra.

"There is a narrative that inventory is growing, which favors buyers. But the how and why is important," said Zillow Director of Economic Research Skylar Olsen. "There may be more homes available for sale over the course of the month, but that's because more leftovers from previous months are sticking around. In truth, fewer homeowners are putting their homes on the market and buyer demand is falling back. Buyers won't have as much competition this shopping season and can take more time finding the perfect match, if it's out there."

Meanwhile, national home values grew 6.6% year-over-year, with the median home is now worth $226,700.

The rate of appreciation has slowed each month since peaking at 8% growth in December 2018.

Zillow says its analysis of mortgage rates show a sharp drop in March to as low as 3.85% before ending the month at 4%, down twenty basis points from March 1.