Buyers Take Note: Housing Market Easing from White Hot to Red Hot

Rhea-AI Summary

The latest Zillow market report for August reveals moderated growth in home values and rents, indicating a shift toward a more balanced housing market. Home values increased by 1.75% month-over-month, down from 1.97% in July, marking the third-largest monthly growth recorded. Inventory rose 4.1% over July, reducing the year-over-year deficit to 22.7%. The typical U.S. home value is now $303,288, reflecting a 17.7% annual increase. Additionally, monthly rent growth decelerated to 1.7%, despite a record 11.5% annual appreciation.

Positive

• Home values grew 1.75% month-over-month, despite slowing down from previous months.
• Home values increased 17.7% year-over-year, reaching $303,288.
• Inventory rose 4.1% compared to July, improving buyer options.
• Monthly home sales increased 3.9% compared to last August.
• Zillow expects 5.93 million home sales in 2021, a 5.1% increase over 2020.

Negative

• Home value appreciation slowed, with 43 of the 50 largest metros seeing a decline.
• Price cuts on listings increased, with 12.3% of homes reducing prices before offers.

SEATTLE, Sept. 16, 2021 /PRNewswire/ -- Runaway monthly increases in home values and rents tempered in August, according to the latest Zillow® market report¹, paving the way for a strong but more manageable housing market come fall. Another month of rising inventory and more for-sale listings taking price cuts are giving buyers more options and potentially less stress as they shop for their next home. 

Home value appreciation had been accelerating on a monthly basis since January but finally eased off the throttle, moderating from 1.97% month-over-month growth in July down to 1.75% growth in August. While this will be good news for buyers looking for any signs of relief, it still represents the third-largest monthly growth in Zillow records. 

"The strong recovery of inventory and initial lift off the gas pedal for home value appreciation is indicative of balance returning to the market," said Nicole Bachaud, economic data analyst at Zillow.  "But, the major demand drivers that have pushed the market to extremes this year are still present — we're moving from a white-hot midsummer to somewhere closer to red hot as we head into the fall."

The deceleration of home value growth is widespread, with 43 of the 50 largest major metros seeing appreciation slow down in August, compared to 20 in July. The largest drop-offs were in Buffalo, San Diego, San Francisco and Austin. 

Still, home values are up a record-breaking 17.7% ($45,557) from a year ago, bringing the typical U.S. home value to $303,288. Top metros for annual growth are Austin (44.8%), Phoenix (31.8%), Salt Lake City (27.9%) and San Diego (26.9%). 

Available housing inventory continued to rise for the fourth straight month, growing 4.1% over July and cutting the annual deficit to 22.7%, up from a low of -33% year over year low in April. For-sale listings rose the most month over month in the Midwest. Meanwhile, Austin and Washington, D.C., now have more available inventory than they did one year ago. 

The share of listings with a price cut rose for the fourth consecutive month, further evidence of a market returning to balance. The share of listings with a price cut grew 1.9 percentage points in August, with a total of 12.3% of listings in the U.S. seeing a price reduction before an offer is accepted. In August 2019, the total share was 17.4%. 

"Another month of rising for-sale inventory gives shoppers more options to choose from and less competition, which should help reduce bidding wars and further moderate rampant price hikes," Bachaud said. "A slightly less frenzied market means buyers have a much better chance to land the home they're bidding on, and may even see a price drop on their saved listings, but keep in mind the market is still much hotter than normal for this time of year."

Home sales have been rising monthly since March and continued to grow, with monthly sales ticking up slightly over July to stand 3.9% above last August. Looking forward, strong recent sales activity means Zillow economists are now expecting 5.93 million sales in 2021, a 5.1% increase over a historically strong 2020. 

In the rental market, monthly rent growth had been accelerating since January, but finally took a step back in August, decelerating to 1.7% growth in August from July's record-high 2%. Despite this, August's 11.5% annual appreciation is the largest in Zillow records going back to 2015. Typical U.S. rents measured by the Zillow Observed Rent Index (ZORI) are $1,874, nearly $200 higher than this time last year. 

Rents are up the most from last year across the Sun Belt, especially in Las Vegas (24.9%), Phoenix (24.8%), Tampa (24.7%) and Riverside (20.6%). Rents fell month over month in Kansas City and Richmond, and stayed flat in Cincinnati. 

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI – Year Over Year Change	ZHVI – Month Over Month Change	Inventory – MoM Change	Zillow Observed Rent Index (ZORI)	ZORI – Month Over Month Change
United States	$303,288	17.7%	1.8%	4.1%	$1,874	1.7%
New York, NY	$561,677	14.0%	1.4%	0.4%	$2,693	1.7%
Los Angeles–Long Beach–Anaheim, CA	$837,312	19.4%	1.6%	2.1%	$2,630	2.0%
Chicago, IL	$282,568	14.0%	1.5%	3.7%	$1,721	0.9%
Dallas–Fort Worth, TX	$320,045	21.0%	2.6%	4.0%	$1,684	2.0%
Philadelphia, PA	$306,033	17.0%	1.2%	2.7%	$1,705	1.5%
Houston, TX	$263,096	16.8%	2.3%	4.8%	$1,519	1.1%
Washington, D.C.	$516,846	13.9%	0.7%	1.6%	$2,125	1.6%
Miami–Fort Lauderdale, FL	$364,216	16.4%	2.1%	-2.7%	$2,343	3.0%
Atlanta, GA	$308,095	21.5%	2.5%	3.6%	$1,827	3.0%
Boston, MA	$599,735	16.8%	1.3%	-1.0%	$2,532	0.7%
San Francisco, CA	$1,331,868	17.9%	1.5%	1.9%	$3,092	0.7%
Detroit, MI	$223,461	18.4%	1.5%	9.5%	$1,397	1.3%
Riverside, CA	$506,174	26.6%	2.7%	6.2%	$2,393	2.0%
Phoenix, AZ	$401,673	31.8%	2.5%	3.6%	$1,806	2.7%
Seattle, WA	$681,045	23.2%	2.0%	1.7%	$2,194	1.9%
Minneapolis–St. Paul, MN	$350,110	14.5%	1.2%	6.0%	$1,590	0.3%
San Diego, CA	$802,680	26.9%	1.9%	2.6%	$2,649	2.2%
St. Louis, MO	$218,878	15.8%	1.0%	4.8%	$1,191	0.5%
Tampa, FL	$303,374	25.9%	3.1%	4.2%	$1,876	3.8%
Baltimore, MD	$347,014	13.9%	1.0%	4.3%	$1,775	1.1%
Denver, CO	$563,145	21.5%	1.8%	5.4%	$1,903	1.6%
Pittsburgh, PA	$199,145	19.3%	0.9%	5.2%	$1,218	1.7%
Portland, OR	$523,642	19.9%	1.7%	3.5%	$1,773	1.5%
Charlotte, NC	$311,157	22.2%	2.6%	4.7%	$1,662	2.1%
Sacramento, CA	$554,083	25.2%	2.6%		$2,152	1.0%
San Antonio, TX	$256,183	18.5%	2.2%	3.5%	$1,374	2.6%
Orlando, FL	$314,117	16.6%	2.5%	2.5%	$1,798	3.0%
Cincinnati, OH	$232,065	16.9%	1.5%	7.1%	$1,356	0.0%
Cleveland, OH	$197,278	18.1%	1.3%	7.8%	$1,261	0.4%
Kansas City, MO	$253,659	18.2%	1.1%	5.0%	$1,262	-0.7%
Las Vegas, NV	$371,092	23.3%	2.6%	7.0%	$1,718	3.1%
Columbus, OH	$261,324	16.2%	1.2%	6.9%	$1,359	1.1%
Indianapolis, IN	$229,575	17.2%	1.4%	5.8%	$1,391	1.3%
San Jose, CA	$1,478,348	19.0%	1.5%	-0.8%	$3,126	1.4%
Austin, TX	$514,711	44.8%	3.2%	6.3%	$1,754	3.2%
Virginia Beach, VA	$288,446	13.6%	1.3%	2.2%	$1,527	1.5%
Nashville, TN	$356,137	18.6%	2.6%		$1,768	2.7%
Providence, RI	$403,984	20.8%	1.9%	6.2%	$1,785	0.7%
Milwaukee, WI	$252,643	17.4%	1.1%	7.7%	$1,192	1.4%
Jacksonville, FL	$294,471	21.5%	2.6%	3.9%	$1,629	2.7%
Memphis, TN	$194,724	16.9%	1.4%	5.2%	$1,535	1.1%
Oklahoma City, OK	$187,885	13.0%	1.4%	8.3%	$1,228	1.5%
Louisville–Jefferson County, KY	$215,947	13.6%	1.0%	8.0%	$1,145	0.2%
Hartford, CT	$291,015	17.5%	1.1%	2.3%	$1,604	0.4%
Richmond, VA	$291,685	13.4%	0.9%	1.7%	$1,429	-0.4%
New Orleans, LA	$243,248	12.2%	1.4%	4.6%	$1,319	1.9%
Buffalo, NY	$225,638	24.6%	1.3%	8.1%	$1,190	1.1%
Raleigh, NC	$363,693	23.4%	3.6%	1.5%	$1,647	2.5%
Birmingham, AL	$206,767	14.6%	1.5%	5.0%	$1,305	0.5%
Salt Lake City, UT	$532,411	27.9%	2.6%	7.2%	$1,584	0.5%

*Table ordered by market size 

¹  The Zillow Real Estate Market Reports are monthly overviews of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Reports is aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas, dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood levels can be accessed at www.zillow.com/research/data.

About Zillow Group

Zillow Group Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

Zillow Group's brands, affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

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SOURCE Zillow

FAQ

What are the latest trends in home values according to Zillow's August report?

Zillow's August report shows home values grew 1.75% month-over-month, down from 1.97% in July.

How much have home values increased year-over-year as per the latest Zillow report?

Home values have increased 17.7% year-over-year, with the typical home value at $303,288.

What changes were observed in housing inventory in August 2021?

Housing inventory rose 4.1% over July, marking the fourth consecutive month of increase.

How did rent growth change in August according to Zillow?

Monthly rent growth decelerated to 1.7% in August from July's record-high of 2%.

What sales predictions does Zillow have for the housing market in 2021?

Zillow anticipates 5.93 million home sales in 2021, a 5.1% increase from 2020.