Despite slowing price growth, potential buyers are still feeling the pinch thanks to low inventory and rising rents
– U.S. home values grew 3.8% year over year to $243,225. This is the smallest annual growth since January 2013, but quarterly growth has reaccelerated in recent months.
– Rent growth accelerated for the fifth straight month, up 2.3% annually to $1,600.
– For-sale inventory fell 6.4% from a year ago. There are 102,463 fewer homes on the market than a year ago.
Annual home value growth has reached its lowest point since January 2013 as the housing market continues its return to historic norms after a red-hot 2017 and 2018. The typical U.S. home value grew 3.8% to $243,225[i], according to the November Zillow® Real Estate Market Report[ii].
Annual home value growth has now slowed in each of the past 19 months, but it has been a gradual slowdown, not slamming on the brakes. The drop in year-over-year growth has not exceeded 0.3 percentage points from one month to the next during this period. Quarterly home value growth – a better indicator of recent shifts in the market – shows the market may have turned a corner and the slowdown will not continue for long. The pace of quarter-over-quarter home value growth has accelerated in each of the past three months, though it remains slower than this time last year.
This slowdown has been felt in much of the country. Among the 35 largest U.S. metros, only San Antonio and Washington, D.C., are growing at a faster annual rate than they were at this time last year. San Jose, Las Vegas, San Francisco and Seattle have slowed the most. San Jose and San Francisco continue to be the only large markets with declining year-over-year home values, though those numbers have become less negative over the past month.
Phoenix is the fastest-growing top-35 market, up 6.1% year over year. Columbus is next at 5.9% annual growth, followed by Charlotte (up 5.8%) and Indianapolis (up 5.7%). The relative affordability of these markets, combined with solid employment numbers, continues to bolster their appeal.
“As we approach the winter holidays, housing, too, is taking a breather,” said Skylar Olsen, Zillow’s director of economic research. “Motivated sellers trying to close before the end of the year dropped their list prices in September and October, with November numbers showing the expected quiet in listing activity. That quiet is echoed by the slower annual appreciation and the lower-than-normal available inventory. But as we anticipate longer days to come, so too we anticipate some relief for housing. Lifting housing starts and permit numbers, strong jobs reports and the steady progress towards more stable and sustainable home value appreciation all point to a healthier 2020 for housing.”
The typical U.S. rent is now $1,600, up 2.3% from this time last year. This is the fifth consecutive month that annual rent growth has accelerated. Phoenix has the fastest-growing rents in the country by a large margin, up 7.6% year over year. Las Vegas is second at a comparatively paltry 5.1%. Rents are falling in Columbus (down 1.9% year over year), Houston (down 0.7%) and San Antonio (down 0.2%).
Inventory fell again, reaching the lowest level in Zillow data that dates back to 2013. The 6.4% year-over-year drop is the biggest in 20 months. There are 102,463 fewer homes on the market than at this time last year. Inventory fell the furthest in Seattle (down 28.8%), Sacramento (down 21.2%) and San Diego (down 19.9%).
Mortgage rates listed on Zillow rose to 3.67% in November after starting the month at 3.62%. Rates peaked at 3.78% on November 8, before falling to a monthly low of 3.58% on November 18. 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 recent changes in the market.
New York, NY
Los Angeles-Long Beach-Anaheim, CA
Dallas-Fort Worth, TX
Miami-Fort Lauderdale, FL
San Francisco, CA
Minneapolis-St Paul, MN
San Diego, CA
St. Louis, MO
San Antonio, TX
Kansas City, MO
Las Vegas, NV
San Jose, CA
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[i] Note: Beginning with publication of November 2019 data, the flagship Zillow Home Value Index is being calculated using a new methodology. Among other improvements, this new approach reflects a more complete view of a given area’s housing stock and its evolution over time; corrects for appreciation driven by property improvements and not market forces; and allows for more custom calculations based on smaller regions and/or different property attributes. Overall, data changed by small amounts compared to the old methodology, though you may notice that the narrative in some markets has changed more than others. For a deeper look at what was changed and why, we invite you to read our new methodology documents: https://www.zillow.com/research/zhvi-methodology-2019-highlights-26221/
[ii] 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/research/data.
For further information: Alex Lacter, Zillow, email@example.com