Median home values in major U.S. metropolitan areas rose 7.5% last year, consistent with increases in both 2016 and 2017. But that may be about to change as the inventory of homes for sale rose last year for the first time in four years.
According to online real-estate firm Zillow, the for-sale inventory has grown on a year-over-year basis for four of the past five months and ended January up 1.2% compared with January 2017. That translates to 19,455 more homes on the market this year.
The less-good news is that the increases to the for-sale inventory are small compared to the rates at which inventory fell over the past four years. In July 2017, homes for sale declined by nearly 13% year over year.
Zillow’s senior economist, Aaron Terrazas, said:
For four years, it felt like home buyers couldn’t catch a break as for-sale inventory became tighter and tighter with each passing month. But during the second half of 2018, something shifted. Home buyers aren’t out of the woods yet, but there is a glimmer of light on the horizon. The number of homes on the market is hesitantly inching higher – now approaching the highest level in a year and a half. In the priciest markets, the jump has been even more definitive. But buyers should not mistake a few more options for a sudden bounty. With home values still increasing at a steady clip, it’s clear that demand still outstrips supply, and with mortgage rates down from recent highs, the first quarter of 2019 is shaping up to be more competitive than the lull we saw as 2018 came to a close.
Home shoppers in West Coast cities saw the largest increases in homes for sale. Inventories rose 43% in San Jose, 37% in Seattle, 32% in San Diego, 29% in Los Angeles and 25% in San Francisco. These have been among the priciest real-estate markets in the country over the past few years, and the increase in inventories may indicate that prices are on their way down (slowly).
Of course, some cities have experienced a drop in for-sale inventories. Washington, D.C., for example, saw a 20% decline in inventory, which Zillow suggests may be related to Amazon’s announcement that the city will be one of two new headquarters’ sites. Sellers are choosing to wait, expecting demand to lift prices as Amazon staffs up.
Moderating mortgage interest rates are also helping potential buyers. Zillow noted that its listing of mortgage loan rates ended January at 4.14%, down from 4.3% at the beginning of the month.
The following chart provides inventory data for selected U.S. metro areas. The data include Zillow’s home value index (ZHVI) at the end of January, the year-over-year change in ZHVI, and the year-over-year change in the for-sale inventory.
| Metro Area | Jan ZHVI | ZHVI YoY | Inventory YoY |
|---|---|---|---|
| United States | $225,300 | 7.50% | 1.20% |
| New York | $438,300 | 4.90% | 5.50% |
| Los Angeles-Long Beach-Anaheim | $652,300 | 3.30% | 29.10% |
| Chicago | $224,800 | 4.10% | 2.20% |
| Dallas-Fort Worth | $242,600 | 10.90% | 15.50% |
| Philadelphia | $232,700 | 3.50% | −6.30% |
| Houston | $205,500 | 6.80% | 8.00% |
| Washington, D.C. | $406,200 | 3.40% | −19.90% |
| Miami-Fort Lauderdale | $283,800 | 7.50% | 8.10% |
| Atlanta | $217,500 | 12.20% | 2.50% |
| Boston | $467,000 | 6.00% | 13.70% |
| San Francisco | $957,400 | 5.10% | 25.00% |
| Detroit | $160,000 | 8.40% | 13.70% |
| Riverside, Calif. | $367,100 | 5.70% | 15.60% |
| Phoenix | $264,900 | 7.40% | −1.60% |
| Seattle | $489,700 | 3.80% | 36.90% |
| Minneapolis-St Paul | $268,100 | 6.30% | 0.20% |
| San Diego | $591,400 | 3.40% | 31.90% |
| St. Louis | $167,000 | 6.00% | −5.80% |
| Tampa | $213,600 | 9.40% | 8.00% |
| Baltimore | $267,900 | 3.60% | −12.20% |
| Denver | $405,300 | 5.10% | 20.30% |
| Pittsburgh | $143,900 | 5.80% | −10.00% |
| Portland, Ore. | $397,300 | 4.70% | 16.80% |
| Charlotte, N.C. | $206,200 | 10.30% | 2.80% |
| Sacramento | $408,700 | 4.30% | 17.30% |
| San Antonio | $192,800 | 7.10% | 11.20% |
| Orlando | $237,100 | 9.50% | 3.50% |
| Cincinnati | $168,900 | 8.40% | 2.40% |
| Cleveland | $145,600 | 6.30% | N/A |
| Kansas City, Mo. | $191,600 | 9.70% | −9.80% |
| Las Vegas | $277,900 | 11.20% | 2.20% |
| Columbus, Ohio | $189,900 | 7.30% | 7.50% |
| Indianapolis | $163,900 | 12.60% | N/A |
| San Jose | $1,245,800 | 7.10% | 42.90% |
| Austin | $308,200 | 6.90% | 5.00% |
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