Inventory Jump Could be Welcome Relief for Home Buyers

Demand for homes remains strong -- and competition intense -- as appreciation reaches new highs

- Housing inventory saw meaningful recovery for the second month in a row, improving 3.1% over May.

- Home value appreciation reached new record highs for both monthly and annual growth.

- Rent recovery is steaming ahead, posting 7.1% annual growth. That's easily the fastest pace of growth for rents since at least 2015.

- Mortgage rates reached close to record lows in June, staying below 3% through the month.

News provided by

Zillow

Jul 19, 2021, 11:09 ET

SEATTLE, July 19, 2021 /PRNewswire/ -- Housing inventory saw significant recovery for the second straight month in June, indicating that the market may be on the road to rebalancing after a long stint of being heavily in sellers' favor, according to the latest Zillow Real Estate Market Report.¹ But inventory remains low, and demand is still strong, sending home value appreciation to new record highs for both monthly and annual growth.

Intense demand for houses over the course of the pandemic sent inventory plummeting to a low of 33% below that for April of the prior year, ramping up competition for houses and elevating prices. But inventory has begun to recover since then, with a 3.1% improvement in June, following a 3.9% increase in May. Inventory now stands at 29.2% below 2020 levels.

"Another month of rising housing inventory gives buyers some additional options and a little more bargaining power," said Jeff Tucker, senior economist at Zillow. "While the level of inventory remains incredibly low by historic norms, it is now on a trajectory that should give buyers reason to hope for a cooldown in price growth this winter, consistent with normal seasonal trends."

Inventory growth still has a long way to go before it balances out the market, however, as relentless demand pushed appreciation into new territory again in June. Home value appreciation broke annual records for the second month in a row, notching 15% growth over last year — the highest in Zillow data reaching back through 1996. The Zillow Home Value Index (ZHVI) reached $293,349, up $38,341 compared to last June.

Annual appreciation among the nation's top 50 metropolitan areas ranged from New Orleans' quite healthy 10.1% to Austin's astronomical 36.8%, sitting ahead of Phoenix's 26.6%.

National home value growth continued to accelerate month over month from a revised 1.8% in May to 2% in June, a new record high in the series' history. Growth in each of the past four months has been far above the pre-pandemic high of 1%, set in the summer of 2005.

Monthly home value growth among major metros ranged from 1.1% in New Orleans to an eye-watering 5.1% in Austin, ahead of San Jose at 3.7% and Las Vegas at 3.6%. Monthly growth accelerated in 48 of the top 50 metros and basically held steady in Pittsburgh and Memphis.

Zillow economists forecast home values to increase by 13.2% by June 2022, a downward revision from the May forecast. June's forecast calls for 6.02 million home sales in 2021, a 6.6% increase over 2020 and a more bullish prediction than in May.

Rent growth maintained widespread momentum in June as the Zillow Observed Rent Index (ZORI) rose 1.8% month over month, pushing typical U.S. rents to $1,799. A strong recovery in the rental market over the past few months has led to 7.1% annual growth in June — the largest annual increase in the series' history reaching back to 2015. This is partly due to rebounding demand in pricey urban markets that were previously offering bargains in the midst of downtown office closures. Even discounting a weakened market one year ago, rents have risen 5.8% since March, the highest quarterly growth in Zillow's data.

The fastest monthly rent growth was seen in Sun Belt standouts Las Vegas (3.6%), Tampa (3.4%), Austin (3.4%) and Phoenix (3.3%). Sunny, relatively affordable areas have led home value appreciation over the past year, and are now seeing outstanding rent growth as well.

Mortgage rates listed by third-party lenders on Zillow began in June at a monthly high of 2.83% and fell to a near all-time low rate of 2.67% on June 11, before finishing the month at 2.72%. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages website by third-party lenders and reflect recent changes in the market.²

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI – YoY Change	Zillow Observed Rent Index (ZORI)	ZORI – YoY Change	ZORI – MoM Change	Inventory – MoM Change
United States	$293,349	15.0%	$1,799	7.1%	1.8%	3.1%
New York, NY	$543,322	12.1%	$2,598	-1.9%	1.9%	4.0%
Los Angeles–Long Beach–Anaheim, CA	$813,679	16.9%	$2,507	4.9%	1.6%	0.6%
Chicago, IL	$275,702	12.3%	$1,763	2.1%	1.3%	6.0%
Dallas–Fort Worth, TX	$306,031	16.9%	$1,604	9.9%	2.4%	3.0%
Philadelphia, PA	$299,195	16.0%	$1,705	4.9%	0.9%	5.7%
Houston, TX	$252,689	12.7%	$1,477	6.6%	2.1%	-0.2%
Washington, D.C.	$509,709	13.9%	$2,086	1.8%	1.7%	7.2%
Miami–Fort Lauderdale, FL	$350,016	12.5%	$2,173	13.5%	2.7%	-6.0%
Atlanta, GA	$293,123	17.4%	$1,742	15.1%	2.6%	2.2%
Boston, MA	$584,745	15.3%	$2,593	0.5%	1.5%	5.6%
San Francisco, CA	$1,295,724	15.4%	$2,985	-2.0%	1.9%	3.2%
Detroit, MI	$216,912	15.7%	$1,357	10.2%	1.4%	8.5%
Riverside, CA	$477,196	22.2%	$2,301	18.1%	2.2%	3.8%
Phoenix, AZ	$379,485	26.6%	$1,690	20.3%	3.3%	1.0%
Seattle, WA	$657,689	20.6%	$2,062	3.6%	2.5%	6.4%
Minneapolis–St. Paul, MN	$343,178	12.5%	$1,604	3.3%	0.6%	9.4%
San Diego, CA	$774,299	23.3%	$2,511	9.7%	1.8%	5.3%
St. Louis, MO	$213,970	15.0%	$1,238	6.7%	0.2%	4.7%
Tampa, FL	$286,808	20.6%	$1,728	17.4%	3.4%	-0.8%
Baltimore, MD	$341,307	13.3%	$1,741	8.5%	1.2%	7.3%
Denver, CO	$542,496	17.9%	$1,822	8.0%	2.0%	10.3%
Pittsburgh, PA	$194,478	17.4%	$1,273	4.7%	1.3%	6.0%
Portland, OR	$507,225	17.2%	$1,676	7.2%	1.8%	6.5%
Charlotte, NC	$297,395	18.3%	$1,605	11.6%	1.9%	3.0%
Sacramento, CA	$530,594	21.0%	$2,087	12.1%	2.0%
San Antonio, TX	$244,351	15.1%	$1,291	8.6%	1.7%	-1.4%
Orlando, FL	$297,967	11.5%	$1,723	11.2%	3.0%	-3.5%
Cincinnati, OH	$225,131	15.4%	$1,323	8.4%	1.0%	4.6%
Cleveland, OH	$192,346	17.0%	$1,268	7.3%	1.0%	8.8%
Kansas City, MO	$246,854	17.1%	$1,297	7.9%	1.2%	8.0%
Las Vegas, NV	$349,962	17.6%	$1,591	19.6%	3.6%	2.1%
Columbus, OH	$254,404	14.9%	$1,338	7.5%	1.1%	8.9%
Indianapolis, IN	$222,910	16.1%	$1,353	10.7%	2.0%	5.9%
San Jose, CA	$1,433,204	16.9%	$3,015	-2.2%	1.2%	1.6%
Austin, TX	$480,328	36.8%	$1,620	12.2%	3.4%	7.7%
Virginia Beach, VA	$281,374	12.0%	$1,456	11.9%	1.9%	5.7%
Nashville, TN	$336,993	14.0%	$1,666	8.7%	2.1%
Providence, RI	$389,267	18.5%	$1,723	13.1%	0.2%	5.9%
Milwaukee, WI	$243,606	16.2%	$1,190	5.5%	1.4%	24.2%
Jacksonville, FL	$279,653	16.4%	$1,543	15.4%	3.1%	1.1%
Memphis, TN	$190,005	15.6%	$1,480	14.6%	1.0%	6.7%
Oklahoma City, OK	$182,407	11.0%	$1,204	8.9%	2.2%	2.2%
Louisville–Jeffer-son County, KY	$211,066	12.9%	$1,168	5.4%	0.2%	4.2%
Hartford, CT	$284,566	16.9%	$1,494	9.1%	1.5%	7.1%
Richmond, VA	$286,938	12.3%	$1,432	9.3%	2.0%	5.2%
New Orleans, LA	$236,306	10.1%	$1,315	6.2%	-1.0%	0.3%
Buffalo, NY	$216,323		$1,185	7.0%	1.0%	10.3%
Raleigh, NC	$342,209	16.9%	$1,549	11.0%	2.4%	-4.7%
Birmingham, AL	$200,677	12.2%	$1,256	7.6%	0.7%	-0.4%
Salt Lake City, UT	$499,913	23.9%	$1,522	12.7%	1.7%	4.6%

*Table ordered by market size

¹The 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.
²Zillow Group Marketplace Inc. is a licensed mortgage broker, NMLS #1303160.

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