Dearth of inventory, price hikes pose challenges for home shoppers

Rent hikes finally ease after record-breaking annual growth

-- Home value appreciation accelerates again to a record 19.9% annual gain.

-- Inventory plunges below 900,000 listings, a record low -- down 42.4% from January 2020.

-- Annual rent growth of 15.9% ticks down from peak; rents are nearly flat from last month.

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Feb 17, 2022, 08:00 ET

SEATTLE, Feb. 17, 2022 /PRNewswire/ -- Home buyers face another challenging shopping season to navigate, as Zillow®'s latest monthly report¹ reveals record-breaking low inventory and unprecedented price growth.

Zillow logo (PRNewsfoto/Zillow Group)

The Zillow Home Value Index (ZHVI) rose 1.5% from December to January to $325,677, up 19.9% from a year ago. The annual growth rate represents an all-time high over the last 20 years, and the monthly pace continued to accelerate after reaching a low of 1.2% in November. If monthly price growth were to hold steady at January's pace, annual growth in 2022 would be 19%. Home values are up 30.9% — nearly $77,000 — since January 2020, on the eve of the pandemic.

"Home buyers today are making bids and closing deals despite some of the most challenging conditions ever: record-few homes for sale to choose from, priced at double-digit gains from last year, financed at sharply rising mortgage rates," said Jeff Tucker, senior economist at Zillow. "It remains to be seen how long buyers can weather this storm, and how long homeowners will watch values rise before deciding to list. Neither have blinked yet. Expect another sizzling hot spring shopping season."

The rising heat in the market is widespread. Monthly home value growth accelerated from December to January in 38 of the nation's 50 largest metropolitan areas. Among these, the fastest monthly growth was in Nashville, San Diego and Las Vegas, all at 2.5%. The slowest growth was in Milwaukee, New York and Washington, D.C., all at 0.7%.

Inventory plunges to record lows

Home shoppers hoping for an injection of options and relief from heightened competition after December's inventory drought instead saw the biggest decline in at least three years. Active inventory dropped 13% — the second straight double-digit monthly drop. Though inventory typically dips in the winter, active inventory is now 22% lower than a year ago, and 42.4% lower than January 2020.

A sharp cutback in new listings hitting the market — down 19% from December — was the main cause. January's flow of new listings was lower than any month since at least the beginning of 2019.

Sales of existing homes in January are expected to be somewhat lower than in December and January 2021. But at a seasonally adjusted annual rate, sales are starting the year roughly on par with full-year 2021 levels, which was the best year for existing sales since 2006. New home sales took a breather late last year as builders worked to complete the backlog of orders they booked in 2020, when they sold the most new homes in 14 years.

"If supply chains can untangle, builders should be able to complete and sell more homes this year than last," Tucker said.

Rent growth slows to a crawl

Monthly rent growth slowed dramatically, falling from 0.9% in November and December to a nearly flat 0.1% in January, the lowest rate seen since October 2020. Year-over-year rent growth was 15.9%, slightly lower than a record-high 16% in December, making typical rent $1,856 per month.

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI – Year- over- Year Change	ZHVI – Month- over- Month Change	For-Sale Inventory Year-over- Year Change	New For- Sale Inventory Year-Over- Year Change	Zillow Observed Rent Index (ZORI)	ZORI – Year- over- Year Change
United States	$325,677	19.9%	1.5%	-22.0%	-16.9%	$1,856	15.9%
New York, NY	$577,647	12.2%	0.7%	-29.3%	-26.9%	$2,788	17.3%
Los Angeles– Long Beach– Anaheim, CA	$878,396	18.5%	1.2%	-33.7%	-22.7%	$2,769	14.3%
Chicago, IL	$292,436	14.0%	0.9%	-26.8%	-20.7%	$1,770	11.1%
Dallas–Fort Worth, TX	$351,550	26.8%	2.2%	-21.7%	-17.6%	$1,704	18.3%
Philadelphia, PA	$315,442	14.2%	0.8%	-11.4%	-13.2%	$1,725	11.3%
Houston, TX	$282,014	19.6%	1.2%	-15.9%	-15.0%	$1,509	12.0%
Washington, D.C.	$529,871	11.6%	0.7%	-12.6%	-21.1%	$2,117	11.7%
Miami–Fort Lauderdale, FL	$404,601	23.5%	2.0%	-49.9%	-28.6%	$2,597	30.6%
Atlanta, GA	$344,420	28.6%	2.2%	-28.6%	-19.2%	$1,866	20.9%
Boston, MA	$617,198	14.1%	0.9%	-31.0%	-25.5%	$2,701	13.2%
San Francisco, CA	$1,391,474	18.3%	1.2%	-25.8%	-21.3%	$3,069	10.5%
Detroit, MI	$229,141	14.9%	1.1%	-6.7%	-11.0%	$1,377	10.7%
Riverside, CA	$544,220	26.7%	1.8%	-7.5%	-9.3%	$2,491	17.7%
Phoenix, AZ	$434,184	30.7%	1.3%	-7.2%	-4.0%	$1,864	25.6%
Seattle, WA	$733,604	23.1%	1.9%	-29.4%	-41.9%	$2,133	16.9%
Minneapolis–St. Paul, MN	$357,512	12.3%	0.8%	-6.5%	-18.1%	$1,585	5.9%
San Diego, CA	$857,991	24.9%	2.5%	-29.0%	-17.9%	$2,788	17.1%
St. Louis, MO	$226,743	14.4%	1.2%	-25.3%	-16.5%	$1,199	10.4%
Tampa, FL	$334,537	30.5%	2.4%	-26.2%	-9.1%	$1,975	28.2%
Baltimore, MD	$356,266	11.6%	0.8%	-10.6%	-12.2%	$1,782	12.2%
Denver, CO	$598,233	23.0%	1.7%	-37.7%	-19.3%	$1,875	15.0%
Pittsburgh, PA	$203,384	15.1%	0.9%	-8.1%	-5.4%	$1,318	7.8%
Portland, OR	$547,041	18.3%	1.2%	-17.5%	-18.1%	$1,799	12.2%
Charlotte, NC	$344,238	27.7%	2.1%	-16.1%	-19.2%	$1,705	19.1%
Sacramento, CA	$583,329	21.8%	1.4%	-38.1%	-41.3%	$2,188	11.7%
San Antonio, TX	$309,475	23.1%	1.8%	-20.2%	-13.9%	$1,389	15.7%
Orlando, FL	$346,877	24.9%	2.1%	-32.1%	-9.1%	$1,885	23.4%
Cincinnati, OH	$242,958	15.7%	1.0%	-11.6%	-15.9%	$1,391	9.8%
Cleveland, OH	$202,044	15.7%	0.9%	-35.7%	-22.8%	$1,244	9.0%
Kansas City, MO	$267,621	18.3%	1.3%	-9.3%	-18.2%	$1,253	10.0%
Las Vegas, NV	$405,542	28.5%	2.5%	-26.0%	-4.6%	$1,819	24.8%
Columbus, OH	$275,240	16.2%	1.2%	-8.0%	-12.5%	$1,374	10.5%
Indianapolis, IN	$249,065	20.0%	1.9%	-7.3%	-5.7%	$1,366	12.2%
San Jose, CA	$1,578,375	18.6%	1.8%	-37.3%	-22.2%	$3,031	10.3%
Austin, TX	$558,699	45.8%	2.3%	18.7%	-25.5%	$1,805	22.7%
Virginia Beach, VA	$305,036	15.1%	1.2%	-22.2%	-25.8%	$1,518	12.9%
Nashville, TN	$403,333	28.9%	2.5%		-34.4%	$1,757	19.5%
Providence, RI	$421,969	18.3%	1.0%	-36.7%	-22.1%	$1,779	14.0%
Milwaukee, WI	$252,346	12.1%	0.7%		-17.5%	$1,231	8.1%
Jacksonville, FL	$327,636	28.8%	2.3%	-21.9%	-11.1%	$1,718	23.0%
Memphis, TN	$212,725	19.7%	1.5%	-1.2%	-8.0%	$1,465	15.1%
Oklahoma City, OK	$201,016	16.6%	1.5%	-4.2%	-14.7%	$1,240	12.1%
Louisville–Jefferson County, KY	$227,188	14.2%	1.0%	-5.2%	-15.3%	$1,175	9.9%
Hartford, CT	$299,964	15.1%	1.0%	-37.3%	-23.8%	$1,532	8.4%
Richmond, VA	$309,300	14.3%	1.3%	-18.8%	-24.1%	$1,493	13.0%
New Orleans, LA	$255,960	14.2%	1.0%	-24.5%	-15.9%	$1,426	16.0%
Buffalo, NY	$227,420	18.4%	0.8%	-13.2%	-10.7%	$1,096	8.3%
Raleigh, NC	$410,121	31.7%	2.2%	-37.2%	-25.2%	$1,648	18.4%
Birmingham, AL	$222,928	17.1%	1.3%	-25.7%	-22.6%	$1,268	11.0%
Salt Lake City, UT	$560,944	27.6%	1.5%	-19.5%	-27.6%	$1,645	19.4%

*Table ordered by market size

¹ The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Report is aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas, dating back to 2000. Mortgage and home loan data is 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 levels can be accessed at www.zillow.com/research/data.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease.

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

SOURCE Zillow