SEATTLE, Jan. 18, 2018 /PRNewswire/ -- Home shoppers looking to buy in 2018 will have 10 percent fewer homes to choose from than a year ago, according to the December Zillow® Real Estate Market Reportⁱ.

For-sale inventory is stuck at crisis levels in some of the nation's hottest housing markets where home values are appreciating fastest. In San Jose, Calif., there are 41 percent fewer homes on the market than a year ago – the annual percentage change in inventory has been falling at a double-digit pace for the past nine months. In Las Vegas, the second fastest appreciating housing market, there are 27 percent fewer homes on the market than a year ago.

The number of homes for sale nationwide has declined on an annual basis for the past 35 straight months, and just 16.7 percent of a panel of housing expertsⁱⁱ surveyed in December 2017 expect a meaningful increase of home building in 2018, a sign that limited inventory could continue to drive the housing market this year.

"Tight inventory fueled by a tight labor market and low interest rates propelled home values to record heights in 2017, but the outlook is now much less certain," said Zillow senior economist Aaron Terrazas. "Tax reform will put more money in the pocket of the typical buyer, but will limit some housing-specific deductions. Overall, this should increase demand for the most affordable homes and ease competition somewhat in the priciest market segments. On the supply side, the market is starving for new homes, but it won't be easy for builders struggling with high and rising land, labor and lumber costs. Aging millennials and young families may be able to find more affordable new homes for sale this year, but they'll most likely be in further-flung suburbs with more grueling commutes to urban job centers."

Lack of inventory, coupled with strong demand from home buyers, is one reason why home values across the country are reaching new peaks. The median U.S. home value rose 6.5 percent over the past year to $206,300, the highest it has ever been.

San Jose, Las Vegas, and Seattle reported the greatest home value appreciation over the past year. In San Jose, the median home value rose 21 percent to a $1,171,800. In Las Vegas, home values rose 14 percent, and in Seattle, they rose 12.5 percent.

Median rent across the nation rose 2.6 percent since last December, the fastest pace of appreciation since June 2016, to a median payment of $1,439 per month. Sacramento, Calif., Riverside, Calif., and Seattle reported the strongest rent growth over the past year.

In Sacramento, rents rose almost 8 percent to a Zillow Rent Indexⁱⁱⁱ of $1,838. Median rent in Riverside rose 6 percent over the past year, and in Seattle, rents rose 5 percent. This is the sixth month in row that Sacramento has led the nation in rent appreciation, having taken the top spot from Seattle in August 2017. Though still toward the top of the national rankings, Seattle reported its slowest rent appreciation in almost three years.

Mortgages rates^iv on Zillow ended the month of December at 3.75 percent. The month high of 3.82 percent was hit during the last week of the month^v, and the low of 3.70 percent was hit during the first week of the month^vi. 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.

About 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 the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow'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 and Zestimates are registered trademarks of Zillow, Inc.

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/local-info/ and www.zillow.com/research/data.
ⁱⁱ According to the December 2017 Zillow Home Price Expectations Survey. This edition surveyed 108 experts between October 24-November 6, 2017. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc. and asked the experts about their expectations for the housing market.
ⁱⁱⁱ The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars. 
^iv Mortgage rates for a 30-year fixed mortgage
^v Month high hit on December 22 and 26, 2017.
^vi Month low hit on December 6, 2017.
^vii The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

SOURCE Zillow