Zillow Group IR Blog

October 2018 Real Estate Market Report

Inventory Climbs Meaningfully for the First Time in Almost Four Years

• The number of homes for sale in October rose 3 percent, the first year-over-year gain of more than 1 percent since December 2014.
• The boost comes nowhere near making up for years of inventory declines: The number of homes for sale in October was 1.62 million, down from 1.96 million in late 2014.
• The country’s median rent continued its slide, dropping 0.1 percent, or one dollar, in October to $1,442 a month from $1,443 last October.

Prospective home buyers can give thanks this season for a rare increase in inventory: The number of homes for sale in October rose 3 percent, the first year-over-year gain of more than 1 percent since December 2014.

The boost comes nowhere near making up for years of inventory declines. In fact, the number of homes for sale in December 2014, after a 1.5 percent year-over-year climb, was 1.96 million. Following October’s 3 percent increase, the number of homes for sale was just 1.62 million.

The major metro with the greatest increase in inventory was San Jose, Calif., where inventory climbed 93.1 percent. San Diego was next, at 43.5 percent, followed by San Francisco at 41.6 percent. The largest decreases were in Las Vegas (down 15.9 percent), Pittsburgh (down 10 percent) and Virginia Beach (down 9.4 percent).

Inventory of homes valued in the bottom third nationally has been low and is starting to rise, gaining 6.8 percent annually in October. That was up from a 3.7 percent year-over-year hike in September and a small 0.6 percent boost in August. Before that, the last time inventory among lower valued homes posted an increase was in September 2014.

Meanwhile, the inventory of homes in the top tier nationally has been steadily high and is now falling – by 1.6 percent in October from a year earlier.

Beginning in October, Zillow has replaced its headline inventory measure with a similar alternative. In the past, the inventory metric was a smoothed, seasonally adjusted measure of median daily inventory, reported by month. It could be interpreted as the median number of homes available for sale on Zillow on any given day during the month. That metric is still available. But the new headline inventory metric is a smoothed, seasonally adjusted measure of monthly inventory. It can be interpreted as the number of homes for sale on Zillow during the month. The monthly inventory series has a few advantages: It’s easier to interpret, is more comparable to traditional inventory measures and is less sensitive to demand in very hot markets. In hot areas where homes do not sit on the market for long, or where the typical time on market is falling, daily inventory will fall commensurately, whereas monthly inventory will be steadier in response to shifting times on market.

Home values keep climbing

Possibly because inventory gains have a long way to go before they make up for years of declines, home values continue to grow steadily. Nationally, the median home value climbed 7.7 percent year-over year in October, the same as its September pace and in line with the 7.5 percent to 8 percent gains it has posted all year.

Among major metros, San Jose, Calif., again clocked the largest year-over-year median home value gain, climbing 17.9 percent to $1.3 million. It was the 13th consecutive month that San Jose led the country for home value gains. Las Vegas had the next largest gain, of 14.7 percent to a far more modest median of $276,200. The smallest gain was for Washington, D.C., where the median home value rose 3.5 percent year-over-year to $401,600. It will be interesting to see how Amazon locating a headquarters office in nearby Arlington, Va., affects values there in the coming years.

U.S. median rent continues to slide

The country’s median rent continued its slide, dropping 0.1 percent, or one dollar, in October to $1,442 a month from $1,443 last October. That followed a 0.2 percent decline in September, which was the first time the U.S. median rent had fallen year-over-year since 2012.

The steepest decline among major metros came in Portland, where the median rent fell 3 percent year-over-year, or $56, to $1,836 a month. It was followed by Seattle with a 2.4 percent, or $54, drop to $2,173 a month, and New York with a 1.9 percent, or $47, decline to $2,378.

Sixteen of the largest 35 metros posted gains in median rent, led by Riverside, Calif., with a 3.1 percent, or $57, boost to $1,906. It was followed by Orlando and Tampa, Fla., where median rents climbed 2.1 percent ($30) to $1,454 and 1.6 percent ($22) to $1,392, respectively.

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