Home Values Break New Growth Records as Demand Surge Presses On

Mortgage rates hit an all-time low of 2.63% in December, pushing buyers' dollars further in competitive market

- Home values in December rose 3.2% over the previous quarter, the largest increase since at least 1996

- Newly pending sales were up 21.7% in December compared to a year ago

- Rents are ticking up from annual lows and remain slightly ahead of last year

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Jan 22, 2021, 05:00 ET

SEATTLE, Jan. 22, 2021 /PRNewswire/ -- Home value growth continued its meteoric rise in December as towering demand for homes carried on into winter, according to Zillow's® latest Real Estate Market Report¹. Houses are going under contact quickly and sales far outpace the year prior as all-time low mortgage rates help keep monthly payments manageable, despite rising prices.

Typical home values in the U.S. climbed to $266,104, up 8.4% from a year ago -- the highest annual increase since January 2014.

Home value growth over the last quarter in the U.S. was 3.2% -- higher than at any time since the Zillow Home Value Index (ZHVI) series began in 1996. Many metros took part in this late surge in appreciation as the nation's housing market rode a wave of high demand deep into the winter. The Sun Belt produced growth standouts including Austin -- the metro predicted to be hottest in 2021 -- which saw 5.3% growth over the previous quarter, while Phoenix, San Diego, and Salt Lake City all clocked 5.1% growth.

"The housing market ended 2020 with an exclamation point, as home values rose sharply near the end of the year at their fastest quarterly rate on record," said Jeff Tucker, senior economist at Zillow. "Sales are taking place at a rapid clip as momentum gathering in the market since June is still pushing forward at full force and is expected to continue for the foreseeable future. Although prices are skyrocketing, record-low mortgage rates keep bringing buyers to the table by keeping monthly payments in reach."

Phoenix led all major metros in yearly home value growth, up 15.3% compared to last December. It snatched the lead away from San Jose -- up 15.2% year over year -- and stayed ahead of Salt Lake City (13.2%), Seattle (13%) and Austin (12.9%).

Monthly home value growth for the U.S. held steady at 1.1%, as it was in November. This is the fastest month-over-month growth in the series history reaching back to 1996. Monthly growth ranged from 0.6% in Las Vegas to 1.8% in Salt Lake City.

Rents nationwide are up 0.2% since November to $1,740, continuing a slow recovery from a yearly low in October of $1,728. Annual rent growth was stunted in 2020, rising just 0.8% -- equivalent to $14 -- year over year. In December of 2019 rents were climbing at 3.5% annually.

Downward slides in rent reversed course late in 2020 in markets like Washington, DC - up 0.2% month over month in December, Boston (0.4%), Los Angeles (0.2%), Chicago (0.2%), and San Jose (0.6%). The rent recovery is broad-based, with positive monthly changes across the U.S. as a whole and in 77 of the largest 100 MSAs for which rent has been measured. In San Francisco (-0.6%), Seattle (-0.8%), and New York (-0.4%), the bottom is still to come, but monthly rent decreases are gradually slowing.

For-sale listings' median time on market for the U.S. stayed extremely short at 14 days, just one day longer than monthly lows in the fall. Newly pending sales are following seasonal trends, but remain elevated -- up 21.7% compared to last year despite available inventory down 26.6%.

Mortgage rates listed by third-party lenders on Zillow reached an all-time low of 2.63% on Dec. 18. Rates entered December at an extraordinarily low 2.71%, hit a monthly high of 2.79% on Dec. 25 and ended the month at 2.75%. Even as prices rose late in 2020, record low mortgage rates have made monthly payments more affordable for buyers. Rates are currently on an upward trend, but are still far below long-term averages.

Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market².

Metropolitan Area*	Zillow Home Value Index (ZHVI), December 2020	ZHVI - YoY Change, December 2020	Newly Pending Listings - YoY Change, December 2020	Zillow Observed Rent Index (ZORI), December 2020	ZORI - YoY Change, December 2020
United States	$266,104	8.4%	21.7%	$1,740	0.8%
New York, NY	$512,941	7.0%	49.2%	$2,469	-8.7%
Los Angeles-Long Beach-Anaheim, CA	$739,930	9.3%	20.9%	$2,589	-0.2%
Chicago, IL	$258,381	6.3%	30.8%	$1,608	-2.1%
Dallas-Fort Worth, TX	$270,757	7.5%	23.5%	$1,612	2.7%
Philadelphia, PA	$275,148	9.7%	75.0%	$1,589	2.5%
Houston, TX	$228,789	6.0%	29.3%	$1,521	1.2%
Washington, DC	$471,888	7.8%	84.9%	$2,022	-2.3%
Miami-Fort Lauderdale, FL	$319,594	7.0%	24.4%	$1,901	2.0%
Atlanta, GA	$261,664	8.9%	15.1%	$1,606	5.8%
Boston, MA	$535,997	9.1%	18.6%	$2,230	-5.9%
San Francisco, CA	$1,167,602	5.9%	56.2%	$2,924	-8.1%
Detroit, MI	$197,049	9.8%	32.0%	$1,325	6.0%
Riverside, CA	$427,863	10.3%	17.6%	$2,218	9.4%
Phoenix, AZ	$328,359	15.3%	25.5%	$1,587	8.4%
Seattle, WA	$586,162	13.0%	17.1%	$1,896	-3.9%
Minneapolis-St Paul, MN	$316,151	7.9%	20.6%	$1,538	1.1%
San Diego, CA	$678,665	12.5%		$2,375	4.3%
St. Louis, MO	$195,380	8.4%	26.5%	$1,113	4.2%
Tampa, FL	$253,596	11.4%		$1,573	6.8%
Baltimore, MD	$316,857	7.6%	37.8%	$1,660	2.8%
Denver, CO	$481,402	8.3%	11.7%	$1,756	0.6%
Pittsburgh, PA	$175,882	9.2%	13.2%	$1,166	2.3%
Portland, OR	$453,127	9.2%	26.8%	$1,670	1.7%
Charlotte, NC	$260,976	9.7%	-1.4%	$1,516	4.1%
Sacramento, CA	$475,045	10.8%	21.6%	$1,942	6.9%
San Antonio, TX	$219,862	6.0%	41.4%	$1,345	2.4%
Orlando, FL	$273,214	7.2%		$1,604	2.1%
Cincinnati, OH	$205,977	11.3%	17.8%	$1,289	5.8%
Cleveland, OH	$173,637	10.8%	32.4%	$1,159	4.6%
Kansas City, MO	$224,826	10.0%	18.7%	$1,203	5.0%
Las Vegas, NV	$313,532	7.6%	13.2%	$1,508	6.8%
Columbus, OH	$231,028	10.3%	13.3%
Indianapolis, IN	$202,370	10.6%	18.9%	$1,271	7.0%
San Jose, CA	$1,287,714	15.2%	-11.1%	$2,970	-6.2%
Austin, TX	$378,454	12.9%	12.1%	$1,548	-0.9%
Virginia Beach, VA	$261,539	7.8%		$1,385	5.9%
Nashville, TN	$300,531	8.3%
Providence, RI	$353,514	10.6%	-11.5%	$1,587	9.8%
Milwaukee, WI	$217,160	11.2%		$1,121	2.3%
Jacksonville, FL	$248,835	8.2%	29.4%	$1,380	5.8%
Memphis, TN	$171,488	10.6%	16.0%	$1,318	9.7%
Oklahoma City, OK	$168,880	7.4%	24.6%	$1,115	4.2%
Louisville-Jefferson County, KY	$196,330	8.6%	8.5%	$1,028	4.8%
Hartford, CT	$258,544	8.6%	39.8%	$1,354	5.2%
Richmond, VA	$266,172	7.3%		$1,312	5.3%
New Orleans, LA	$221,704	7.5%	23.7%	$1,331	3.3%
Buffalo, NY	$192,742	10.9%	8.9%	$1,112	5.6%
Raleigh, NC	$303,677	7.2%	7.6%	$1,522	2.8%
Birmingham, AL	$186,523	9.3%	46.0%	$1,110	6.0%
Salt Lake City, UT	$428,280	13.2%		$1,427	3.9%
*Table ordered by market size

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. Methodologies and all current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.

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SOURCE Zillow