Hottest Markets Are Seeing Growth in Homes For Sale

Good News for Home Shoppers: Inventory is Growing

Some of the hottest markets in recent years are now seeing the biggest growth in homes for sale.
  • There were 3 percent more homes on the market in October than there were a year ago.
  • The median home value nationwide is $221,500, up 7.7 percent from this time last year.
  • Inventory had declined on an annual basis for 44 straight months before seeing positive growth.
  • The median rent is $1,442, down 0.1 percent ($1 per month) year-over-year, the second consecutive month of annual rent declines.

After years of a competitive market characterized by the lack of homes for sale, inventory increased on an annual basis in October.

There were 3 percent more homes for salei across the country than there were a year ago, according to the October Zillow® Real Estate Market Reportii. This comes as welcome news to today’s home shoppers, who have been faced with declining inventory for nearly four years. Last October, inventory fell at a 10.2 percent annual pace. A slight uptick in September (0.1 percent) led to a greater gain in October, and could be a sign of future increases in available inventory.

High cost markets that had been among the nation’s hottest saw some of the biggest gains in inventory. San Jose, California, saw the biggest annual increase in inventory, adding about 1,500 homes for sale to the market to increase inventory by 93.1 percent from last October, when it reached its lowest recorded level. San Diego, San Francisco and Seattle also saw big gains in the number of homes for sale.

“In yet another sign that the housing market is cooling, we’re finally starting to see inventory return after several years of annual declines,” said Zillow Senior Economist Aaron Terrazas. “The combination of tight supply and strong demand have pushed up home values in recent years, but markets always ebb and flow and there is no doubt that the tides that have buoyed sellers are shifting.

Buyers are not out of the woods yet: While there are more homes for sale, rising mortgage rates are quickly eating into what they can afford to pay. First-time buyers have benefited from flat or falling rents over the past year – making it somewhat easier to save for a down payment – but the decline in rents could be short-lived if higher buying costs push some people back toward the rental market.”

Home value appreciation held steady in October at 7.7 percent, with the median U.S. home worth $221,500. San Jose and Las Vegas saw the strongest home value appreciation. These two markets have led the nation’s largest markets in annual home value growth for the past year.

About half of the 35 largest metro areas saw slower home value growth in October 2018 than they did in October 2017. The biggest slowdown was in Seattle, which fell from 12.6 percent annual growth to 7.1 percent. Home value growth increased the most in Indianapolis, from 5.5 percent in 2017 to 11.9 percent in 2018.

Rents declined on an annual basis by 0.1 percent, or $12 per year, to a national median rent of $1,442. Rents fell year over year in 18 of the 35 largest markets, led by Portland, Oregon, where rents fell by 3 percent ($672 annually).

Mortgage rates on Zillow were 4.68 percent at the end of October, just below the high of 4.70 percent set at the beginning of the monthiii. 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,
October
2018
ZHVI
Year-
over-Year
Change
Zillow Rent
Index,
October
2018
ZRI Year-
over-Year
Change
Inventory
Year-over-
Year Change
United States $ 221,500 7.7% $ 1,442 -0.1% 3.0%
New York, NY $ 433,700 5.2% $ 2,378 -1.9% 9.0%
Los Angeles-Long Beach-
Anaheim, CA
$ 648,900 5.0% $ 2,756 0.7% 31.9%
Chicago, IL $ 223,200 5.2% $ 1,638 -1.8% 6.2%
Dallas-Fort Worth, TX $ 235,500 10.9% $ 1,597 -0.6% 14.8%
Philadelphia, PA $ 230,200 4.5% $ 1,570 -1.4% -5.5%
Houston, TX $ 202,100 6.5% $ 1,551 0.3% 5.5%
Washington, DC $ 401,600 3.5% $ 2,136 -0.8% 0.6%
Miami-Fort Lauderdale, FL $ 279,700 7.8% $ 1,859 0.3% 10.6%
Atlanta, GA $ 212,800 13.1% $ 1,397 0.6% -0.8%
Boston, MA $ 459,600 5.9% $ 2,369 -1.5% 17.8%
San Francisco, CA $ 967,200 9.6% $ 3,403 -0.6% 41.6%
Detroit, MI $ 158,300 9.3% $ 1,197 0.0% 11.6%
Riverside, CA $ 360,700 5.3% $ 1,906 3.1% 21.6%
Phoenix, AZ $ 260,400 7.5% $ 1,361 0.6% -1.9%
Seattle, WA $ 488,600 7.1% $ 2,173 -2.4% 36.6%
Minneapolis-St Paul, MN $ 264,800 6.9% $ 1,642 0.6% 2.6%
San Diego, CA $ 589,800 5.4% $ 2,547 0.0% 43.5%
St. Louis, MO $ 164,500 5.9% $ 1,141 -1.0% -1.8%
Tampa, FL $ 209,700 9.7% $ 1,392 1.6% 9.4%
Baltimore, MD $ 266,600 4.5% $ 1,741 -0.1% 0.3%
Denver, CO $ 400,900 6.2% $ 2,060 0.3% 19.0%
Pittsburgh, PA $ 142,700 6.7% $ 1,088 0.2% -10.0%
Portland, OR $ 392,300 4.8% $ 1,836 -3.0% 17.5%
Charlotte, NC $ 201,700 11.1% $ 1,296 0.2% 2.0%
Sacramento, CA $ 402,600 4.7% $ 1,847 1.2% 21.9%
San Antonio, TX $ 189,400 6.5% $ 1,332 -1.0% 11.2%
Orlando, FL $ 232,300 9.8% $ 1,454 2.1% 5.9%
Cincinnati, OH $ 164,900 6.8% $ 1,281 -0.1% 3.0%
Cleveland, OH $ 143,900 6.8% $ 1,142 -0.9% N/A
Kansas City, MO $ 187,300 9.3% $ 1,267 -1.0% -4.6%
Las Vegas, NV $ 276,200 14.7% $ 1,312 1.5% -15.9%
Columbus, OH $ 186,000 8.3% $ 1,338 0.5% 4.8%
Indianapolis, IN $ 159,500 11.9% $ 1,198 -1.3% N/A
San Jose, CA $ 1,290,000 17.9% $ 3,506 -0.8% 93.1%
Austin, TX $ 302,100 6.5% $ 1,685 -1.1% 7.2%

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 and data analysts 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.

Zillow is a registered trademark of Zillow, Inc.

i Zillow Economic Research is replacing its headline inventory measure with a similar alternative. The previous headline Inventory metric was a smoothed, seasonally adjusted measure of median daily unique inventory by month. It could be interpreted as the median number of unique homes available for sale on Zillow on any given day during the month. The new headline inventory metric is a smoothed, seasonally adjusted measure of unique monthly inventory. It can be interpreted as the number of unique homes for sale on Zillow during the month. ii 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/dataiii Set on October 8, 2018.

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After earning her bachelor’s degree in journalism at the University of Central Florida, Tracey set out in the real world at Florida Realtors in 1994 as a communication assistant, working her way up to editor in chief of Florida Realtor magazine. In 2004, she left the association to start her freelance writing and editing business. One of her first clients was REAL Trends, and she started working for the organization in 2005. In 2014, Tracey was promoted to editor in chief of publications for REAL Trends. She handles the writing and editing of all REAL Trends publications and marketing materials, including LORE Magazine, the REAL Trends newsletter and the blog. She is also the primary podcast interviewer where she conducts interviews with top real estate industry leaders and affiliated industry leaders. Tracey is married with two children.

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