Zillow: Home values appreciate at fastest rate in 2 years

Dive Brief:

  • The median U.S. home value was up 5.5% year over year in September to $189,400, according to real estate listing website Zillow’s September Real Estate Market Report.

  • September’s growth represents the fastest pace of home value appreciation in two years. Portland, OR, Dallas and Seattle posted the biggest gains of the country’s 35 largest metros.

  • Meanwhile, inventory has fallen 6% from September 2015 to September 2016.

Dive Insight:

Inventory conditions nationwide remain tight, particularly in the starter and trade-up categories, pushing prices up and making it difficult for first-time buyers to enter the market. In its third quarter 2016 Inventory and Price Watch, real estate website Trulia noted that U.S. housing stock contracted for the fifth-consecutive quarter to be down 6.7% year over year.

Existing-home sales are up, however, rising 3.2% between August and September to a seasonally adjusted 5.47 million, which is 0.6% ahead of the same period a year ago. And tight inventory conditions are pushing those prices up. The National Association of Realtors reported that the median existing home price was up 5.6% in September 2016 from a year ago, marking the 55th-consecutive month of price increases.

New construction is looking up, too. Single-family new construction stood out in September’s otherwise disappointing housing starts report from the Commerce Department. The category posted a rate of 783,000 starts in September, up 8.1% from the previous month and 5.4% from a year ago.

September’s existing-home sales were driven by first-time buyers, according to the NAR. A report earlier this month from Realtor.com found that individuals between the ages of 25 and 34 — the older half of the millennial generation — made up one-third of homebuyers in September.

Tight inventory, rising prices and an increase in first-time buyers has builders looking up. The National Association of Home Builders/Wells Fargo Housing Market Index was at its second-highest point this year in September, driven by low mortgage rates and high future sales expectations as residential builders are more confident for activity ahead.

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Filed Under: Residential Building Economy
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