Housing Market Remains a Challenge for Buyers, Says Zillow CEO

The U.S. housing market continues to present significant challenges for potential homebuyers, with affordability issues persisting despite some signs of improvement in inventory, according to Zillow Group CEO Jeremy Wacksman.

“The housing market remains a bit of a challenge for buyers,” Wacksman told CNBC’s “Squawk on the Street” in a recent interview. The affordability equation has shifted dramatically since the pandemic, reversing what was once a favorable environment for buyers.

In 2020, purchasing a home often made financial sense compared to renting, with homeowners building equity rather than paying rent. However, that calculus has changed substantially. “With home prices having run up so much since the pandemic, even with rent prices, we’re seeing an increase recently less than home prices means it’s better to rent than to buy in many markets,” Wacksman explained.

Despite these challenges, Zillow Group reported strong first-quarter results, with overall growth of 13%, revenue up 8%, and rentals revenue surging 33%. “Even though it’s a tough time to buy and it’s getting more expensive to rent, you’re seeing folks able to do it and you’re seeing them increasingly turn to services like ours to get it done,” Wacksman noted.

The core issue facing the housing market isn’t just about interest rates, according to Wacksman, but rather a fundamental supply problem. “The challenge for buyers and the affordability challenge is really an availability challenge,” he said. “In the for-sale market, we are probably 4.5 million homes underbuilt. We’ve been chronically under-building since the global financial crisis.”

This structural deficit has been compounded by current homeowners’ reluctance to list their properties. Many sellers feel “stuck” in their current homes due to the favorable mortgage rates they secured before the recent rate increases, creating a lock-in effect that further constrains inventory.

There are some positive signs, however. New listings increased 19% in March compared to the previous year, suggesting some easing of the inventory crunch. But Wacksman cautioned about putting these improvements in perspective: “It’s really important to put that in context. Think about what that listing level looks like from pre-pandemic levels, from the norms. When we were seeing five and a half to 6 million homes trade every year, we’re still 30-40% off those levels.”

This persistent shortage of available homes has kept annual sales at around 4 million units on a seasonally adjusted basis for some time now. According to Wacksman, these transactions largely represent “those are the folks that can’t put off the move, that have a new job, that have a change of location, that they have to get it done.”

The situation is further complicated by recent inflation data. While the overall inflation report came in softer than expected, shelter costs continue to outpace broader price increases, climbing 4% over the last year compared to the 2.8% rise in the core consumer price index, as reported by CNBC.

As the market continues to evolve, the fundamental mismatch between housing supply and demand remains a critical factor shaping affordability and accessibility for American homebuyers.