Zillow Group IR Blog

January 2020 Real Estate Market Report

  • The typical home in the U.S. is worth $245,193, up 3.8% from a year ago.
  • There were 1,500,262 homes listed for sale in January, down 8% from a year ago.
  • Typical U.S. rent grew 2.3% year-over-year, to $1,602.

The last full monthly read of U.S. housing market data before the coronavirus pandemic hit the nation in earnest shows a market that had turned a bit of a corner and was well-poised for a strong traditional spring home shopping season. Time will tell whether that momentum is enough to keep the market afloat through to the other side of the crisis.

Annual U.S. home value growth slowed for the 21st consecutive month in January, but you have to squint to spot the difference. Paired with inventory that is hovering near record lows, the nearly two-year slowdown in the housing market may come to an end right as home shopping season kicks off.

U.S. home values grew 3.8% year-over-year to a Zillow Home Value Index of $245,193, less than one-hundredth of a percentage point slower than the previous month (before rounding: 3.77% year-over-year growth in December, 3.76% in January), according to the January Zillow® Real Estate Market Report. Annual home value appreciation has slowed in each month since April 2018, but this is the smallest month-over-month drop during that period.

Among the nation’s 50 largest markets, annual home value growth in January was fastest in Memphis (6.9%), Phoenix (6.7%) and Birmingham (6.3%). Growth was slowest in San Jose (-2.9%), New York (+.8%) and San Francisco (1%). Annual growth in San Francisco, while very modest, broke a streak of annual declines that dated to May 2019.

Annual home value growth in 27 of the 50 largest U.S. metro markets was faster in January compared to December, and was flat in one additional market. In other words, the slowdown has already reversed itself in many places, and it may be only a matter of time before that reversal will begin showing up in faster national appreciation numbers.

At the same time as the ongoing slowdown in home value appreciation has largely bottomed out, the number of homes listed for sale remains incredibly low. Inventory increased from record lows a month earlier, but was down 8% year-over-year in January — the biggest annual drop since March 2018. There were 1,500,262 homes on the market last month, up 4,295 from the previous month but down 130,310 year-over-year.

Inventory was down year-over-year in 47 of the nation’s 50 largest metro markets. For-sale inventory fell the most from a year ago in Seattle (-27.6% year-over-year),  Phoenix (-24.5%) and San Diego (-23.1%). The three large markets in which inventory rose year-over-year in January were: San Antonio (+7.7%), Detroit (+6.4%), and Chicago (+0.3%).

This persistently low inventory is a key reason why home value growth is expected to speed up once again. The economy has remained strong, mortgage rates are low and buyers will be competing for a limited number of homes this home shopping season. Inventory appeared to have hit bottom and was on an upswing a year ago, rising year-over-year in every month between September 2018 and April 2019. But in hindsight, that “growth” was illusory, largely a result of a temporary stock market dip, prolonged government shutdown and a surge in mortgage interest rates that spooked buyers and/or prodded on-the-fence sellers to list for fear of losing out if a prolonged slump developed, pushing inventory up.

But as the economic storm clouds on the horizon in early 2019 cleared up, we saw buyers return in droves, taking advantage of ultra-low mortgage rates. This first look at 2020 data suggests we could see the most competitive home shopping season in years, as buyers are already competing over near-record-low numbers of homes for sale. That is likely to mean more multiple-offer situations, and that buyers will have a harder time finding the perfect fit for their families. The good news for buyers is that low mortgage rates are helping to make homeownership more affordable, and home builders are responding to the hot housing market by starting construction on more homes than at any time since 2007.

Rent growth remained stable, with the typical U.S. rent now $1,602/month, up 2.3% year over year and just $1 more than last month. Annual rent growth has hovered between 1.7% and 2.4% in every month over the past year. Rent was up year-over-year in 47 of the nation’s top 50 markets. Annual rent growth was fastest in October in Phoenix (up 7.9% YoY), Pittsburgh (+7%) and Cincinnati (+5.7%).

Zillow Group January 2020 IR Roundup Zillow Group Feb. 2020 IR Roundup