U.S. Home Values Fall for the Second Straight Month

Home value appreciation is slowing, but low mortgage rates and accelerating rents could add more buyers to the market

-- The typical U.S. home is worth $226,800, down 0.1% month-over-month.

-- Home values grew 5.4% annually, down from 7.5% annual growth a year earlier.

-- The median monthly rent in the U.S. is $1,479. Rents grew for the seventh straight month, up 2.7% year-over-year.

-- For-sale inventory in the U.S. fell 0.5% annually. There are 7,946 fewer homes for sale than in May 2018.

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Jun 25, 2019, 08:00 ET

SEATTLE, June 25, 2019 /PRNewswire/ -- U.S. home values dropped for the second month in a row, according to the May Zillow® Real Estate Market Reportⁱ.

The typical U.S. home is worth $226,800, down 0.1% from a month earlier. Home values also fell in April, ending a streak of 85 consecutive months of gains that added $78,500 in value to the median home. This trend held in 32 of the 35 largest markets in the U.S. – home values rose in St. Louis and Phoenix, and remained flat in Riverside.

Year-over-year appreciation, while still strong compared to historic levels, has slowed in each of the past five months, falling to 5.4% growth in May. A year ago, home values grew 7.5% annually. Indianapolis and Cincinnati are the only markets that have accelerated from last May, while San Jose, Calif., remains the lone market to have turned negative year-over-year, falling 5.7%.

"Stepping back to think about housing over the long haul, the current slowdown in home value appreciation is expected and comforting," said Zillow Director of Economic Research Skylar Olsen. "While the slowdown has been arguably abrupt, the soft declines over the past two months should not cause too much alarm. The aggressive pace of home values over the past several years was known to be unsustainable. Buyers simply couldn't afford it, so prices are correcting. The expectation here is that we are steadily returning to normalcy—something U.S. housing hasn't seen in two decades—and that will mean continued, but ever more moderate, volatility. The significant drop in mortgage rates, as well as renewed rent growth, may help return U.S. housing values to positive appreciation earlier than otherwise."

While home value growth has slowed, rent prices are accelerating. The median monthly rent in the U.S. grew for the seventh month in a row, rising 2.7% to $1,479. Rents are growing faster now than a year ago in 28 of the top 35 markets, led by Las Vegas at 8.9%.

Inventory fell 0.5% year-over-year in the U.S., the third straight month of declines after inventory rose in January and February. The most significant drop was in Kansas City, which saw 27.8% fewer homes for sale than this time last year. Inventory growth was largest in Las Vegas and San Jose, both of which among the markets where home value growth has slowed the most in the past year.

Mortgage rates listed on Zillow continued to fall in May. Rates ended the month at 3.87%, down 14 basis points from May 1 and 88 basis points from a peak of 4.75% in November 2018. 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.

Metropolitan Area	Zillow Home Value Index, May 2019	ZHVI Month- over- Month Change	ZHVI Year- over-Year Change	Zillow Rent Index, May 2019	ZRI Year- over- Year Change	Inventory Year-over- Year Change
United States	$226,800	-0.1%	5.4%	$1,479	2.7%	-0.5%
New York, NY	$442,800	-0.2%	3.8%	$2,413	1.5%	5.1%
Los Angeles-Long Beach-Anaheim, CA	$649,700	-0.2%	1.1%	$2,835	3.1%	16.2%
Chicago, IL	$225,700	-0.3%	2.6%	$1,703	4.0%	5.8%
Dallas-Fort Worth, TX	$242,600	-0.5%	6.3%	$1,651	3.5%	11.0%
Philadelphia, PA	$232,400	-0.4%	2.4%	$1,611	2.7%	-10.9%
Houston, TX	$205,200	-0.2%	3.7%	$1,586	2.3%	4.4%
Washington, DC	$407,500	-0.2%	2.2%	$2,179	2.3%	-24.8%
Miami-Fort Lauderdale, FL	$282,500	-0.5%	4.0%	$1,934	3.8%	5.3%
Atlanta, GA	$219,200	-0.4%	8.3%	$1,462	5.0%	11.1%
Boston, MA	$464,200	-0.6%	3.2%	$2,415	2.4%	13.4%
San Francisco, CA	$944,200	-0.4%	0.6%	$3,458	1.8%	21.4%
Detroit, MI	$162,300	-0.2%	6.1%	$1,229	2.8%	14.7%
Riverside, CA	$370,800	0.0%	4.4%	$2,004	5.8%	2.7%
Phoenix, AZ	$266,900	0.0%	5.5%	$1,464	7.2%	0.9%
Seattle, WA	$490,300	-0.5%	1.2%	$2,245	3.0%	23.9%
Minneapolis-St Paul, MN	$271,200	-0.1%	4.8%	$1,706	4.3%	1.5%
San Diego, CA	$591,000	0.0%	1.2%	$2,660	4.6%	11.5%
St. Louis, MO	$166,900	0.1%	3.8%	$1,163	2.1%	-12.8%
Tampa, FL	$214,500	-0.3%	5.6%	$1,454	4.9%	7.2%
Baltimore, MD	$267,500	-0.3%	1.4%	$1,751	0.7%	-12.2%
Denver, CO	$408,000	-0.3%	3.2%	$2,126	3.7%	25.0%
Pittsburgh, PA	$142,800	-0.5%	2.0%	$1,105	2.4%	-13.2%
Portland, OR	$396,800	-0.3%	2.5%	$1,883	2.6%	4.0%
Charlotte, NC	$209,000	0.0%	8.1%	$1,352	4.6%	8.9%
Sacramento, CA	$411,800	-0.1%	3.6%	$1,927	4.6%	-0.4%
San Antonio, TX	$194,000	-0.1%	5.1%	$1,381	3.4%	17.5%
Orlando, FL	$240,100	-0.2%	7.2%	$1,543	6.8%	6.5%
Cincinnati, OH	$170,100	-0.4%	6.9%	$1,305	2.3%	-5.4%
Cleveland, OH	$145,800	-0.5%	4.1%	$1,171	2.7%	-3.6%
Kansas City, MO	$191,900	-0.4%	6.4%	$1,303	2.9%	-27.8%
Las Vegas, NV	$279,300	-0.4%	7.5%	$1,418	8.9%	41.8%
Columbus, OH	$192,300	-0.3%	6.8%	$1,374	3.1%	-3.1%
Indianapolis, IN	$166,300	-0.3%	9.8%	$1,239	3.5%	N/A
San Jose, CA	$1,176,200	-1.4%	-5.7%	$3,583	2.4%	40.6%
Austin, TX	$311,200	-0.1%	5.3%	$1,724	2.6%	-4.3%

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 great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists, data analysts, applied scientists and engineers 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.

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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/research/data.

SOURCE Zillow