The rise of U.S. home values declined during August versus the year ago month falling below the 5% rate for the first time since 2015, according to the Zillow Home Value Index.
But while annual growth continues to slow, quarterly growth is picking up somewhat. Quarterly growth reached an annualized rate of 3.4% in August – up from 0.4% in May – suggesting the market may be re-accelerating even as annual growth continues to slow. And this growth was echoed in local markets: Quarterly growth in 38 of the 50 largest metro areas was faster in August than it was in May.
Quarterly growth may be a better indicator of more-recent market shifts and inflection points, since it compares the most recent market conditions to those from only a few months ago instead of a full year ago, when conditions were much different. Over the summer, for example, the Federal Reserve cut key benchmark interest rates and consumer mortgage interest rates fell to near-historic lows – a marked contrast to a year ago, when mortgage rates spiked to their highest level in years. This may not yet be reflected in annual growth figures, but lower rates may be pushing more buyers into the market – which is likely to have a strong upward push on home values recently and in months to come.