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Housing Market Moderation Gives Buyers Breathing Room

Inventory rises as the typically slower winter season approaches

- Monthly growth in both home values and rents eased further in September, continuing the seasonal calming that began late this summer

- Inventory is up a tick, marking the fifth consecutive month of growth

- Buyers have a bit more time to find and decide on a home, as listings' typical time on market rises to nine days

Oct 19, 2021

SEATTLE, Oct. 19, 2021 /PRNewswire/ -- The modest calming of the market that began late in the summer has continued into early fall, the latest market report1 from Zillow® shows. Buyers are finding slightly more selection, more price cuts and a bit more time to evaluate a home before it goes under contract. 

"The housing market continued its gradual return to some semblance of normalcy in September, helped by the typical seasonal cooldown in shopping conditions that we expect to see every fall," said Jeff Tucker, senior economist at Zillow. "Homes are still selling quickly, and prices have not receded, but it's not quite as extreme a sellers' market as we saw back in the spring and summer. Buyers today will benefit from a little more time to pick the right home and a few more listings to choose from."

The Zillow Home Value Index (ZHVI) for the U.S. rose to $308,220 in September, up 1.6% from August. That's the second straight slowdown after monthly appreciation peaked this year at 2% in July. Monthly home value appreciation slowed from August in 44 of the 50 largest U.S. metros. Monthly growth in these markets ranged from a low of 0.4% in San Jose to 3% appreciation in Raleigh.

Despite the modest cooling, September marked the fourth-fastest monthly pace of appreciation and a record pace of yearly appreciation in Zillow data dating back to 2000. The typical U.S. home was worth 18.4% more in September 2021 than it was in September 2020, surpassing August's then-record of 17.5% year-over-year appreciation. Annual appreciation in large markets was in the double digits across all 50 major markets, ranging as high as an eye-watering 44.9% in Austin and 32.2% in Phoenix to a comparatively "sluggish" rate of 13.2% in New Orleans. 

Returning inventory
The inventory shortage remains acute in much of the country, down 19.9% from this time a year ago and 37.7% below 2019 levels. However, slow, incremental growth in inventory is helping shift the scales ever so slightly in buyers' favor after hitting an all-time low in April.

For-sale inventory crept up by 0.4% from August, a smaller gain than the previous four monthly increases dating to May, but roughly matching pre-pandemic seasonal patterns in which inventory usually peaked for the year in August or September. This is the first month in which the year-over-year inventory deficit was smaller than 20% since July 2020.

This small sign of relief for buyers is showing itself in the gradually slowing of market velocity. Homes are taking one day longer to sell than in August, with listings going into the pending stage in a median of just nine days, giving buyers a bit more time to find the homes they're looking for and make an offer on them before they're snatched up.

As homes are staying on the market longer, a higher percentage of them are seeing price cuts. The share of homes listed on Zillow that saw a price cut before going under contract rose to 14.7% in September, up from just 7.9% in April. 

Rental rebound echoes price boom
Much like home appreciation, monthly rent growth in the Zillow Observed Rent Index (ZORI) slowed to 1.3%, down from recent highs of 2% in July and 1.5% in August. Rent growth cooled from August to September in 39 of the 50 largest U.S. metros, and rent prices fell in Kansas City and San Francisco.

Annually, typical U.S. rent is up $213 to $1,888. The 12.9% annual increase is the highest in Zillow records dating back to 2015. Rents rose annually in all 50 of the largest metros, with Sun Belt destinations Tampa (25.7%), Las Vegas (25.7%) and Phoenix (25.6%) topping the list. Rounding out the bottom are San Jose (4.9%), Minneapolis–-St. Paul (5.8%) and San Francisco (6%). 

Looking forward, Zillow economists expect 13.6% home value growth through September 2022. This is a stronger 12-month forecast than last month, supported by a slower inventory recovery and heightened sales and mortgage application activity. Existing home sales are expected to reach 6.04 million in 2021, up 7% from an already strong 2020 and higher than prior forecasts. 

Metropolitan
Area*

Zillow Home
Value Index

(ZHVI)

ZHVI –
Year Over
Year
Change 

ZHVI –
Month
Over
Month
Change

Inventory –
MoM
Change

Zillow
Observed
Rent Index

(ZORI) 

ZORI –
Month
Over
Month
Change

United States

$308,220

18.4%

1.6%

0.4%

$1,888

1.3%

New York, NY

$567,059

14.1%

1.1%

-3.4%

$2,737

1.4%

Los Angeles, CA

$846,526

18.8%

1.1%

-1.2%

$2,713

1.2%

Chicago, IL

$284,285

13.9%

1.1%

-0.2%

$1,718

0.2%

Dallas–Fort Worth, TX

$326,597

22.5%

2.3%

-0.4%

$1,699

1.4%

Philadelphia, PA

$307,863

16.7%

0.9%

-0.7%

$1,724

1.1%

Houston, TX

$267,794

17.9%

1.9%

0.5%

$1,554

0.0%

Washington, D.C.

$518,949

13.3%

0.4%

0.3%

$2,114

0.7%

Miami–Fort Lauderdale, FL

$375,082

18.2%

2.2%

-3.5%

$2,422

2.6%

Atlanta, GA

$315,033

23.0%

2.3%

-1.4%

$1,872

2.0%

Boston, MA

$603,291

16.2%

0.8%

-2.4%

$2,510

1.1%

San Francisco, CA

$1,341,085

17.7%

0.9%

0.7%

$3,088

-0.1%

Detroit, MI

$223,714

17.9%

1.0%

3.4%

$1,394

0.4%

Riverside, CA

$518,349

27.6%

2.2%

3.7%

$2,431

1.2%

Phoenix, AZ

$410,028

32.2%

2.1%

2.5%

$1,841

1.4%

Seattle, WA

$687,363

22.7%

1.2%

-2.2%

$2,212

1.2%

Minneapolis–St. Paul, MN

$349,400

14.3%

0.8%

1.1%

$1,614

0.6%

San Diego, CA

$809,206

26.5%

1.3%

-3.2%

$2,710

1.4%

St. Louis, MO

$219,897

15.1%

0.6%

0.0%

$1,166

1.2%

Tampa, FL

$310,378

27.7%

2.6%

0.5%

$1,931

2.4%

Baltimore, MD

$348,505

13.5%

0.7%

1.2%

$1,785

0.7%

Denver, CO

$569,007

21.9%

1.3%

0.6%

$1,920

0.7%

Pittsburgh, PA

$199,630

18.5%

0.5%

2.9%

$1,192

1.0%

Portland, OR

$528,038

20.0%

1.2%

0.8%

$1,803

0.9%

Charlotte, NC

$317,876

23.8%

2.3%

-0.6%

$1,691

1.6%

Sacramento, CA

$563,703

25.4%

1.8%


$2,198

0.7%

San Antonio, TX

$260,466

19.3%

1.7%

0.8%

$1,405

1.7%

Orlando, FL

$321,666

18.7%

2.4%

-0.4%

$1,833

2.2%

Cincinnati, OH

$235,166

17.5%

1.4%

2.5%

$1,340

1.2%

Cleveland, OH

$198,532

17.5%

1.0%

1.5%

$1,228

1.0%

Kansas City, MO

$257,080

18.2%

1.0%

0.6%

$1,234

-0.6%

Las Vegas, NV

$378,476

24.1%

2.1%

3.9%

$1,767

1.4%

Columbus, OH

$263,852

16.4%

1.1%

1.3%

$1,383

0.1%

Indianapolis, IN

$232,572

17.4%

1.4%

0.6%

$1,422

0.7%

San Jose, CA

$1,477,055

17.6%

0.4%

-3.5%

$3,086

0.1%

Austin, TX

$520,898

44.9%

1.6%

1.9%

$1,781

1.3%

Virginia Beach, VA

$292,029

14.2%

1.2%

-1.2%

$1,545

1.8%

Nashville, TN

$365,573

20.9%

2.4%


$1,773

1.3%

Providence, RI

$408,604

20.6%

1.3%

2.2%

$1,804

0.2%

Milwaukee, WI

$252,418

16.8%

0.5%

-1.6%

$1,155

0.3%

Jacksonville, FL

$301,415

23.5%

2.5%

1.9%

$1,678

1.8%

Memphis, TN

$198,369

17.7%

1.5%

-0.7%

$1,502

0.2%

Oklahoma City, OK

$190,559

13.7%

1.4%

1.7%

$1,228

0.2%

Louisville–Jefferson County, KY

$218,428

13.6%

1.0%

3.0%

$1,172

0.9%

Hartford, CT

$293,690

17.2%

1.1%

-2.6%

$1,587

1.3%

Richmond, VA

$294,818

13.9%

1.0%

-2.3%

$1,469

1.6%

New Orleans, LA

$246,868

13.2%

1.5%

-2.7%

$1,354

2.7%

Buffalo, NY

$225,838

23.9%

0.6%

0.7%

$1,152

0.7%

Raleigh, NC

$374,649

26.0%

3.0%

3.3%

$1,661

1.1%

Birmingham, AL

$210,425

15.3%

1.6%

-0.5%

$1,314

0.1%

Salt Lake City, UT

$532,175

28.2%

1.5%

1.2%

$1,593

1.0%

*Table ordered by market size

The Zillow Real Estate Market Reports are monthly overviews 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 the Zillow Real Estate Market Reports is 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 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 nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

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

 

SOURCE Zillow

For further information: Alex Lacter, Zillow, press@zillow.com