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Looks can be deceiving: Annual home value growth is slowing down, but that is not necessarily bad news. Instead, the gradual slowdown may be a sign that the market is steadying itself, rather than coming full stop or throttling into unhinged growth. And the quarterly growth tells a slightly different story, as its acceleration the past three months indicates we may be on the rebound.
Annual home value growth has reached its lowest point since January 2013 as the housing market continues its return to historic norms after a red-hot 2017 and 2018. The typical U.S. home value grew 3.8% to $243,225[i], according to the November Zillow Real Estate Market Report.
Annual home value growth has now slowed in each of the past 19 months, but it has been a gradual slowdown, not slamming on the brakes. The drop in year-over-year growth has not exceeded 0.3 percentage points from one month to the next during this period. Quarterly home value growth – a better indicator of recent shifts in the market – shows the market may have turned a corner and the slowdown will not continue for long. The pace of quarter-over-quarter home value growth has accelerated in each of the past three months, though it remains slower than this time last year.
This slowdown has been felt in much of the country. Among the 35 largest U.S. metros, only San Antonio and Washington, D.C., are growing at a faster annual rate than they were at this time last year. San Jose, Las Vegas, San Francisco and Seattle have slowed the most. San Jose and San Francisco continue to be the only large markets with declining year-over-year home values, though those numbers have become less negative over the past month.
