The median U.S. home value rose 6.9% year-over-year to its highest point in a decade at $195,700 in February while housing inventory contracted by 3% during the period, according to Zillow's February Real Estate Market Reports.
Rents increased 1.2% from the year-ago mark to $1,406 per month on the Zillow Rent Index.
Tampa, FL, Seattle, Dallas and Orlando, FL, saw the highest annual home-value appreciation among the 35-largest U.S. metros. Minneapolis, Cincinnati and Detroit experienced the sharpest drop in the number of home listings in the last year.
While housing starts posted gains in February, a decrease in building permit authorizations — an indicator of future activity — could prolong the inventory shortage, fueling home-price increases. Still, new-home sales came in strong in February, rising 6.1% to a seven-month high and helping to ease some pressure from high demand.
Despite rising mortgage interest rates and higher prices overall, buyers are optimistic about purchasing a home. A National Association of Realtors survey earlier this month found that eight in 10 homeowners in the first quarter of 2017 said it was a good time to buy a home, up slightly from the prior quarter. The millennial homebuyer segment could be another point of confidence in the market. The NAR noted in a separate report that first-time buyers — many of whom are millennials — accounted for 35% of home sales in 2016.
Meyers Research found that of the 1,000 millennials it surveyed across 48 states in December 2016, 55% said they planned to purchase a home in the next five years while 30% said they expected to own a home in the next one to three years.
Part of the push for homeownership could stem from rent-price increases in the nation's largest rental markets. The Zillow report noted that major markets like Seattle, Portland, OR, Sacramento, CA, and Dallas posted median rent growth well above the national 1.2% average increase.
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