Home Value Growth Slowing Going into Home Shopping Season

SEATTLE, Feb. 22, 2018 /PRNewswire/ -- Home value growth across the country is increasing at the slowest pace in 15 months, according to the January Zillow® Real Estate Market Reportⁱ. Over the past year, home values rose 6.7 percent to a median home value of $207,600.

In May 2017, national home values were rising at their fastest pace since the housing bubble, up 7.6 percent year-over-year, but have since slowed, dropping about a tenth of a percentage point each month since last summer.

While home value growth is slowing, mortgage rates are picking up, ending the month of January at 4.04 percentⁱⁱ -- the highest rate in four yearsⁱⁱⁱ. Going into the spring home shopping season, buyers may find a slight relief on prices, but should expect higher mortgage rates to lead to an increase in monthly costs.

"The pace of home value appreciation we experienced during much of last year was not sustainable, and a slow glide path down to a more normal appreciation rate has been expected for some time," said Zillow Senior Economist Aaron Terrazas. "This slowdown is nothing to be overly concerned with -- demand from home buyers remains very high, and inventory remains tight. New home construction is growing, providing some relief to buyers who can afford the generally high price point of new homes. It's important to note that home values are still growing very quickly relative to historic norms. After years of intense competition, some buyers may be more willing than previously to take more time with the process and to wait until the right home at the right price comes on the market, even if it's not for several months. Removing a lot of this frenzy, especially as inventory remains incredibly tight, may prove to be good news for beleaguered buyers."

Markets with the greatest home value appreciation are in the West -- San Jose, California, Las Vegas and Seattle reported the greatest home value growth over the past year. In San Jose, home values rose about 23 percent – about three times faster than its historic pace – to a median home value of $1,202,900.

Tight inventory will put a strain on buyers this home shopping season, even more so than last year. There are almost 10 percent fewer homes on the market than a year ago, with San Jose, Las Vegas and Indianapolis reporting the greatest drop in inventory. New home starts have increased about 7 percent over the past year, a positive trend but still insufficient to meet demand.

Median rent across the nation rose 2.6 percent since last January, to a median payment of $1,441 per month. Sacramento, California, Riverside, California and Seattle reported the highest year-over-year rent appreciation among the 35 largest U.S. housing markets. Median rent in Sacramento rose just over 8 percent to a Zillow Rent Index^iv (ZRI) of $1,845. Rent in Riverside rose 6 percent year-over-year, and rent in Seattle rose 5 percent.

Mortgage rates^v on Zillow gradually increased throughout the month of January, starting at 3.77 percent and ending at 4.04 percent, the month high. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect the most recent changes in the market.

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

ⁱ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.
ⁱⁱ Mortgage rates on Zillow.
ⁱⁱⁱ Mortgage rates have increased further through the first three weeks of February. They are about 30 basis points higher than January month-end.
^iv The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.
^v Mortgage rates for a 30-year fixed mortgage.
^vi The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
^vii The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars. 

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SOURCE Zillow, Inc.