According to Zillow’s August Real Estate Market Report, the median U.S. home is now worth $229,600, up 4.9% from last August, the lowest year-over-year change since April 2015. Annual growth has steadily slowed for eight consecutive months covering a period of significant change for the U.S. housing market. The rate of quarterly growth, a better indicator for recent market shifts and inflection points, has risen in each of the past three months.
Each of the 35 largest metros is appreciating at a slower annual rate than a year ago, but quarterly growth has accelerated since May in 26 of these. Of these large markets, only San Jose (down 10.8% annually) and San Francisco (down 1.9%) saw year-over-year declines, while home values in Las Vegas, Chicago, Portland, Seattle, Sacramento, Boston, Baltimore, New York, Los Angeles, Washington, D.C., and San Diego fell quarter-over-quarter.
The fastest-growing large markets were Indianapolis (up 7.9% year-over-year), Charlotte (up 7.1%) and Atlanta (up 6.9%). These markets have led the way in each of the past few months. The biggest quarterly gains were in Pittsburgh (up 1.7%), Tampa (up 1.7%) and Cleveland (up 1.2%).
“We have persistently strong consumer confidence and the significant drop in mortgage rates to thank for the housing market’s return to modest home value growth,” said Zillow Director of Economic Research Skylar Olsen.
Meanwhile, rents continued to pick up the pace in August, marking the second consecutive month that rent growth has accelerated. The typical rent in the U.S. is $1,595, up 2% from a year ago.
Rents are growing faster than a year ago in 29 of the 35 largest markets. Both Las Vegas and Phoenix grew 6% annually, the largest yearly growth for any market since October 2016. Only one market fell year-over-year – Portland, which saw negative growth for the fifth month in a row.
Inventory fell 3.9%, the biggest annual drop in 16 months. There are 61,792 fewer homes on the market than this time last year. New listings grew on an annual basis for the second consecutive month, up 2.1% year-over-year.
The for-sale market has experienced persistently low inventory over the past few years, due in part to a shortage of new construction. A majority of experts surveyed by Zillow expect that shortage to last until 2022 or later.
Mortgage rates listed on Zillow fluctuated in August, ending the month at 3.7%, up four basis points from August 1. Rates peaked at 3.8% on August 8.