- The Zillow Residence Worth Index (ZHVI) rose 1.6% from August to September and 18.4% year-over-year, a brand new record-high tempo of annual appreciation, to $308,220.
- The median residence sale went pending in 9 days, someday longer than in August.
- Stock was up simply 0.4% from August, a smaller month-to-month achieve than the earlier 4 months, and stays virtually 20% decrease than this time in 2020.
Annual progress in residence values set one other file excessive of 18.4% in September, however a more in-depth have a look at the info reveals that the modest slowdown in progress that started late in the summertime continued into early fall, giving consumers barely extra choice and a bit extra time to breathe.
The U.S. Zillow Residence Worth Index (ZHVI) rose to $308,220 in September, up 1.6% from August. That’s the fourth-fastest month-to-month tempo of appreciation recorded by Zillow in knowledge relationship again to 2000, but additionally the second-straight slowdown after month-to-month appreciation peaked this yr at 2% in July (slowing to 1.8% in August). The standard U.S. residence was value 18.4% extra in September 2021 than it was in September 2020, surpassing August’s then-record of 17.5% annual appreciation.
Residence values had been up on the month and the yr in all 50 of the biggest metro areas tracked by Zillow. Month-to-month progress in these markets ranged from a low of 0.4% in San Jose to three.0% appreciation in Raleigh. Annual appreciation in giant markets was within the double digits throughout all 50 markets, ranging as excessive as an eye-watering 44.9% in Austin and 32.2% in Phoenix to a relatively “sluggish” charge of 13.2% in New Orleans.
Stock’s gradual return
For-sale stock, a measure of what number of listings had been out there available on the market within the month of September, crept up by 0.4% from August. That’s a smaller achieve than the earlier 4 month-to-month will increase relationship to Might (starting from 3.1% to 4.1%), however roughly matching pre-pandemic seasonal patterns the place stock usually peaked for the yr round August or September.
The modest stock restoration this summer time, after hitting an all-time low in April, nonetheless leaves stock down 19.9% from this time a yr in the past. However even there there’s a silver lining — the final time the year-over-year stock deficit was lower than 20% was July 2020. It’s sluggish progress, and the stock scarcity stays very acute. Patrons will nonetheless see valuable few choices available on the market in a lot of the nation, which is prone to sustain the aggressive strain on the listings that do hit the market. However issues are slowly altering in consumers’ favor.
One other modest, incremental change in consumers’ favor is the regularly slowing market velocity. Properties are nonetheless promoting extremely quick: The median residence itemizing in September went pending in simply 9 days. Even so, that’s 1 day longer than in August, giving consumers even a bit extra time to search out the properties they’re in search of and make a suggestion on them earlier than they’re snatched up.
Rental rebound echoes value increase
Month-to-month progress within the Zillow Noticed Lease Index slowed once more in September, to 1.3% from current highs of two% in July (and 1.5% in August), however progress stays very quick. The nation’s typical lease is $1,888/month, 12.9% greater than this time final yr.
Annual lease progress was constructive in all 50 of the biggest metros, with progress in Tampa (25.7%) Las Vegas (25.7%) and Phoenix (25.6%) topping the listing, and San Jose (4.9%), Minneapolis (5.8%) and San Francisco (6%) rounding out the underside. Month-to-month progress was constructive in 47 of the 50 largest metros, down very barely from August in Kansas Metropolis (-0.6%) and San Francisco (-0.1%) and unchanged in Houston.
Residence gross sales exercise — which has exceeded expectations in current months — is anticipated to get stronger within the near- and longer-terms, whereas residence worth progress is prone to sluggish considerably by the tip of the yr however to strengthen by Q3 2022 (each relative to earlier expectations).
Residence values are anticipated to develop 4.4% from September by the tip of this yr, and to finish 2021 up 19.5% from the tip of 2020. The near-term, three-month forecast is decrease than the 4.7% progress anticipated beforehand from August to November, largely pushed by current slowdowns (nonetheless modest) in residence worth progress noticed all through the summer time. Over the longer-term, nonetheless, our expectations for residence worth progress have strengthened, from an preliminary forecast of 11.7% by August 2022 to a revised forecast of 13.6% by September 2022. The comparatively robust long-term outlook is pushed by the slowdown in stock progress, coupled with stronger pending residence gross sales and for-purchase mortgage functions exercise — which is anticipated to result in tighter longer-term market situations (and quicker residence worth appreciation) than beforehand anticipated.
We at the moment count on 6.04 million current residence gross sales to shut in 2021, up 7% from an already robust 2020 and in addition up from prior forecasts of 5.93 million gross sales this yr. Like longer-term residence worth progress, robust current progress in pending residence gross sales and for-purchase mortgage functions mixed to drive up our gross sales expectations for the rest of this yr. Our longer-term forecast for gross sales was additionally revised up, partly as a consequence of modifications in residence affordability. Although affordability continues to worsen, it’s doing so at a slower tempo than we had beforehand anticipated and subsequently putting much less downward strain on our long run outlook.
Nevertheless, many draw back dangers to our forecast stay. The expiration of mortgage forbearance packages provides uncertainty to the outlook for for-sale stock, and elevated inflation heightens the chance of near-term financial coverage tightening, which might end in greater mortgage charges and weigh on housing demand.