March Market's Signs of Chilling Demand

The "sister trends" of chilling home value growth and overall inventory gains are tied more to demand changes than supply, according to the latest market report from Zillow.

The national median home value in March rose by less than 7 percent year-over-year for the first time in more than two years to $226,700. According to the real estate platform's director of economic research Skylar Olsen, inventory is growing without a supply of new for-sale listings. Rather, writes Olsen, inventory is growing due to changing demand conditions, as homebuyers are more willing to wait for the right listing, rather than rushing to the right-now listing, and they are less apt to pay sellers' asking prices.

While long-term housing demand continues to look strong, we’re seeing our first set of significant local housing slowdowns since the nationwide downturn in 2007. Other formerly white-hot markets that are jamming on the brakes include: San Diego, where home values grew just 1.3 percent annually in March (down from 8.6 percent year-over-year growth in march 2018); San Francisco and Los Angeles, both growing at 2 percent year-over-year, down from 9.5 percent and 7.6 percent last year; and Seattle, growing at a 2.6 percent annual pace, from 11.8 percent a year ago. Judging by their trajectory, it is possible home value appreciation will continue to soften and go temporarily negative in these markets as well.

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