According to the Zillow Real Estate Market Report from data in July 2019, home value growth in the U.S. is strong but it’s continuing to slow. The rate of annual home value appreciation decreased for the seventh consecutive month.
The market report from Zillow provides a monthly overview of both national and local real estate markets. It reveals that the average U.S. home is worth $229,000, an increase of 5.2% compared to the same time last year. Although this is the smallest annual appreciation since October 2015, with home values rising 7.7% year-over-year this time last year, home values are still up 0.3% month-over-month. Zillow says that this is an indication that “values are stabilizing after a period of relatively extreme growth rather than headed for a sustained downturn.”
Home Values with the Greatest Growth
Home values have seen the greatest growth in Salt Lake City, Indianapolis, and Charlotte. However, even these cities are beginning to see a slow in growth. New Orleans, Birmingham, and Oklahoma City were the only cities that had a growth rate larger than the same time last year. New Orleans real estate values had come to a halt in 2018 but climbed back up to 2.7% this year, while in Birmingham 5.5% rose to 6.9% and in Oklahoma City 2.9% increased to 4%.
Director of Economic Research Skylar Olsen
Zillow Director of Economic Research Skylar Olsen said:
As talk builds of a potential recession in the next year or two, housing remains fairly stalwart. The slowing appreciation is ultimately a good sign that the market is adjusting in response to the growing unaffordability of down payments, while low mortgage rates are keeping those with the required savings interested despite softer growth out the gate. The uptick in the rate of homes coming onto the market – a good and true increase in supply – should be a boon to those inventory-starved home buyers still searching near the close of home shopping season. While buyers are catching a break, renters have seen prices continue their steady upward climb, presenting yet another obstacle in the quest to save for that down payment.”
Despite four consecutive months of declines, inventory grew 1.3% annually. Compared to this time last year, there are 19,978 more homes for sale. Zillow says, “New listings drove the inventory growth in July, up 5.7% from a year ago.” While home value growth slowed compared to the previous year, just three of the 50 largest markets saw a decline in rents (Houston, Buffalo, and Baltimore). Phoenix and Las Vegas are two cities where rental growth was particularly strong.
Home Values in Pennsylvania
The value of a home in Philadelphia is $233,300, with a 2019 year-over-year change of 2.1%, less than half of the national rate. However, the Zillow Rent Index for Philadelphia is at 2.5%, higher than the national figure. In Pittsburgh, there is a similar situation, with a drop from a 7.3% year-on-year change this time last year, to 2.5% this July.
Home Values in Florida
In Miami-Fort Lauderdale, the home value is $284,300. With a year-over-year change to the ZHVI of 3.2%, the drop from 8.2% last year is larger than in many other regions. Tampa presents a similar picture, with an index of 5% this year, down from 10.6% last year. And in Orlando, 9.4% has fallen to 5.1%, while the index in Jacksonville has fallen from 10.5% to 5.5%. Year-over-year change in the rent index is, however, higher than the national average by several percentage points. In Jacksonville, for example, it stands at 3.9% and at 3.7% in Tampa, compared to the national figure of 1.9%.
Home Values in Virginia
The year-over-year home value appreciation in Richmond, VA is at 4% in 2019 – compared to 5.3% in 2018. The value index is currently at $232,000. In Virginia Beach, 2.8% has almost halved to 1.5%. Rental growth is also slower in these two locations, at 1.3% and 1.1%, respectively.
Take Away
Although home value growth is not as rapid is it was, there is still strong growth across the country and in many regions. Slower home value growth had not meant that rental prices have fallen. In fact, they have been increasing in nearly all of the 50 largest housing markets, with higher rental costs contrasting the slower home value growth but reflecting that values are still strong, and perhaps suggesting a greater need for rented housing.
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