How low can you go? If you’re the nation’s for-sale housing inventory, shockingly low. In December of 2019, there were roughly 120,000 less homes for sale year-over-year, representing a 7.5 percent drop that is the lowest in Zillow’s records. Only four of the top 50 markets experienced an inventory gain compared to last year, pushing home values and rents up in the areas that experienced loss in their supply. Compared to a year ago, when inventory was up year-over-year in 33 markets, the end of 2019 brought a much tighter market. However, the shrinking inventory may have a positive twist. Experts point to high interest rates and international affairs scaring buyers off in 2018: Now that the rates are low and the nation has strong job growth, more Americans are ready to buy, thus depleting the supply that wasn’t high in 2018 either. Still, low inventory is putting pressure on buyers as they scramble to find an affordable home that fits their budget and location preferences.
The housing market at the end of 2019 looked markedly different than the end of 2018, with a modest bump in inventory and an ongoing slowdown in home values a year ago giving way to inventory levels at their lowest on record and home value growth seemingly poised to re-accelerate.
The U.S. Zillow Home Value Index grew 3.75% in December from a year ago, and 0.3% from November, to $244,054, according to the December Zillow Real Estate Market Report. Annual growth in home values has slowed compared to the month prior in each of the past 20 months, cooling from an annual pace of 6.7% in April 2018 to the current pace reached in December.
Among the nation’s 50 largest markets, annual home value growth in December was fastest in Memphis (+7.2% YoY), Phoenix (+6.5%) and Columbus (+5.9%). Growth was slowest in San Jose (-6.4%), San Francisco (-1%) and New York (0.7%).