U.S. home values maintained their upward march in August, with Zillow reporting a 5.1% year-over-year increase, matching July's pace of growth, to a Zillow Home Value Index of $188,100. The real estate website predicted that this rate of growth should slow to 2.7% by August 2017.
Incomes are also on the rise, up 5.2% in 2015 to beat the annual near-5% rise in home prices for the first time since 2011. Inventory has seen slight growth since the beginning of the year, but available housing stock is still down 5% from August 2015.
- The pace of growth in rental rates has slowed (1.7%) to a Zillow Rent Index of $1,405. Once again, the metros with the highest rate of year-over-year rent appreciation are in the West: Seattle (9.7%), Portland, OR (7.4%), Sacramento, CA (5.5%), San Diego (4.9%), San Francisco (4.8%) and Los Angeles (4.7%).
Portland (14.8%), Dallas (12%), Seattle (11.3%) and Denver (10.7%) recorded the biggest home value growth year-over year, while the San Francisco Bay Area has begun to see a slowdown in price increases.
The easing of rental-rate growth should put renters in a better position to save for a down payment, said Zillow Chief Economist Svenja Gudell, and buyers in some markets should see more available housing options as inventory levels rise. For now, however, residential real estate remains a seller's market.
Relief might be on the way for those metros with limited housing availability. Trulia reported last week that although U.S. housing inventory fell 6.7% year-over-year, 21 of the country's largest metro areas had actually increased stock, mostly in California and Florida. Cape Coral-Fort Myers, FL (36.7%), Miami (33.1%), Las Vegas (29.8%), Fresno, CA (24.4%), North Port-Sarasota-Bradenton, FL (23.4%), San Francisco (19.3%) and West Palm Beach, FL, all added housing since August 2015.
Although San Francisco and Miami increased their inventories, those metros still fall short of demand. According to a recent report by the National Association of Realtors, 80% of the metros they studied don't have enough housing to meet demand, and construction companies, they said, need to increase output. Just to reach a change-in-total-jobs-to-new-home-permits ratio of 1.6, New York (218,541 permits required), Dallas (132,482), San Francisco (127,412), Miami (118,937), Chicago (94,457), Atlanta (93,627) and Seattle (73,135) require a significant increase in new, single-family residential construction.