Home Value Growth Finally Accelerated in February, Ending a 21-Month Slowdown

But impacts from the coronavirus pandemic may make this upturn short-lived

- U.S. home values rose 3.9% annually in February, up from 3.8% in January. The typical home in the U.S. is now worth $247,084.

- Inventory fell to a new low, down 8.4% year-over-year nationally and nearly 30% in some markets.

- All eyes are on how economic impacts from the coronavirus pandemic will affect housing in the months to come in what is typically the hottest period for home shopping. Zillow research has shown sales volume is typically more affected than prices during health crises, and home values have continued to rise during most recent recessions.

News provided by

Zillow

Mar 19, 2020, 15:41 ET

SEATTLE, March 19, 2020 /PRNewswire/ -- After a nearly two-year slowdown, year-over-year home value growth rose from the month prior in February. The typical home value in the U.S. is now $247,084, a 3.9% increase from a year ago, according to the February Zillow® Real Estate Market Reportⁱ.

U.S. home values have not fallen on an annual basis since summer 2012, and have only done so in a few of the most expensive markets in recent years. But the rate of annual appreciation nationally had slowed in each month between May 2018, when they grew 6.7% year-over-year, and January 2020, when they grew 3.8%.

This turn in home values comes as for-sale inventory again fell to a new low in Zillow data that dates back to 2013. Inventory is down 8.4% in the U.S. and 29.4% in Phoenix, which had the biggest annual gain in home values among the 35 largest U.S. metros. This continued tightening of homes on the market, along with incredibly low mortgage rates that make monthly payments more affordable, continues to be a key factor putting pressure on prices as buyers compete for the limited homes that are available.

The economic impacts of the coronavirus pandemic were only beginning to be revealed as February ended, so it is possible this reacceleration will be a blip, not a trend, and reverse itself in the coming months. The U.S. economy has entered a bear market, with major financial indices falling by more than 25% since the beginning of the year. Zillow research on past pandemics has shown that home sales activity slowed during the outbreak, sometimes significantly, but prices remained stable and the market recovered quickly once the outbreak subsided.

If the U.S. were to fall into an economic recession, that would dampen the outlook for housing somewhat as that often means a recovery will be slower and more prolonged. But it's unlikely a recession now would have the same impact on the housing market as the Great Recession did in the mid-2000s. Previous research by Zillow about other economic downturns over the past 23 years shows that, historically, home values tend to rise faster than inflation during a recession.

"Zillow's February numbers show the strong position the housing market was in just ahead of the novel coronavirus's spread in the United States, and the subsequent stock market downturn," said Jeff Tucker, economist at Zillow. "In February we saw inventory stuck near record lows, which was finally enough to reignite home price appreciation after a cooler 2019. Homebuyers were flocking to the market this winter with their finances buttressed by the longest economic expansion in memory, and with their purchasing power magnified by rock-bottom mortgage interest rates. Now, though, as so much is uncertain, we are entering uncharted territory for the housing market."

Home value growth accelerated from January to February in 23 of the 35 largest U.S. metros. The acceleration was greatest in expensive West Coast markets, led by San Jose, which saw positive annual home value growth for the first time since January 2019. Home values grew the most year-over-year in Phoenix (+7%), Columbus (+6.3%) and Charlotte (+5.8%).

Mortgage rates listed by third-party lenders on Zillow rose to a peak of 3.91% on February 28 after starting the month at 3.75%. Rates reached their monthly low on February 27 at 3.7%. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site by third-party lenders and reflect recent changes in the market.

Metropolitan Area	Zillow Home Value Index, February 2020	ZHVI Year- over-Year Change, February 2020	ZHVI YOY Percentage Change From Last Month	Inventory Year- over-Year Change (Percentage), February 2020	Inventory Year-over- Year Change (Number), February 2020
United States	$247,084	3.9%	0.1%	-8.4%	-135,705
New York, NY	$483,379	0.9%	0.1%	-3.9%	-3,480
Los Angeles- Long Beach- Anaheim, CA	$687,810	4.1%	1.7%	-20.1%	-5,899
Chicago, IL	$240,595	1.0%	0.0%	1.3%	590
Dallas-Fort Worth, TX	$254,821	2.2%	-0.1%	-6.1%	-2,079
Philadelphia, PA	$250,156	3.2%	0.1%	-13.2%	-3,677
Houston, TX	$218,783	2.2%	-0.3%	-4.3%	-1,595
Washington, DC	$437,409	3.0%	-0.2%	-8.9%	-1,860
Miami-Fort Lauderdale, FL	$303,426	2.5%	0.7%	-10.4%	-6,163
Atlanta, GA	$241,153	5.0%	0.2%	-5.2%	-1,899
Boston, MA	$491,740	2.1%	0.2%	-11.2%	-1,662
San Francisco, CA	$1,118,362	2.7%	1.7%	-14.6%	-1,158
Detroit, MI	$180,039	3.8%	0.1%	5.4%	1,050
Riverside, CA	$386,644	3.4%	0.3%	-18.4%	-3,873
Phoenix, AZ	$290,720	7.0%	0.3%	-29.4%	-7,625
Seattle, WA	$535,121	4.3%	1.3%	-26.7%	-3,181
Minneapolis-St Paul, MN	$294,680	4.0%	0.1%	-1.5%	-193
San Diego, CA	$619,887	5.0%	1.3%	-24.7%	-2,424
St. Louis, MO	$179,884	2.9%	-0.3%	-7.5%	-961
Tampa, FL	$231,247	4.3%	0.4%	-16.5%	-3,451
Baltimore, MD	$291,929	1.1%	0.0%	-9.7%	-1,249
Denver, CO	$441,557	2.5%	0.3%	-17.4%	-1,867
Pittsburgh, PA	$159,187	4.2%	-0.4%	-11.8%	-1,209
Portland, OR	$420,531	2.0%	0.2%	-16.2%	-1,577
Charlotte, NC	$238,651	5.8%	0.2%	-14.4%	-1,690
Sacramento, CA	$435,941	5.1%	1.0%	-15.3%	-1,091
San Antonio, TX	$205,179	3.2%	-0.7%	5.9%	702
Orlando, FL	$256,896	3.6%	-0.1%	-14.8%	-2,077
Cincinnati, OH	$185,754	4.4%	-0.5%	-15.5%	-1,177
Cleveland, OH	$159,405	4.7%	0.3%	-10.2%	-1,067
Kansas City, MO	$205,552	3.6%	0.0%	-12.4%	-1,061
Las Vegas, NV	$293,030	1.1%	-0.1%	-21.4%	-2,889
Columbus, OH	$212,422	6.3%	0.1%	-7.2%	-429
Indianapolis, IN	$181,438	5.0%	0.2%	N/A	N/A
San Jose, CA	$1,224,923	0.4%	3.4%	-19.7%	-604
Austin, TX	$339,033	3.5%	-0.5%	-13.7%	-1,296

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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.