August 2020 Market Report and Zillow Weekly Market Report Through September 12

• U.S. home values grew to $256,663 in August, a 0.7% increase from July, the largest monthly increase since 2013.
• Low demand continues to push rents lower — typical U.S. rent dropped 0.3% from July to $1,771 in August, the biggest monthly decrease since 2017.
• Rapid sales further contracted inventory, which is now 29.4% lower than a year ago.

A months-long inventory shortage helped push the typical U.S. home value to $256,663 in August, up 0.7% from July — the biggest month-over-month increase in nearly seven years. Monthly home value growth accelerated last month in 48 of the 50 largest markets and was relatively constant in the other two (Birmingham, Ala. and Richmond, Va.).

Home values were up 5.1% in August compared to a year ago, the largest annual rise since March 2019. Markets with the highest year-over-year increases in home value were Phoenix (10.5%), San Jose (10.3%) and Seattle (9.2%). The smallest year-over-year gains in home values among major metros were seen in Chicago (1.9%), New York (2.3%) and San Francisco (2.7%).

Nationwide, demand continues to outpace supply. Homes continue to fly off the market at record pace and inventory is contracting, according to the most recent Zillow weekly housing market data. Listings' typical time on the market is 14 days, according to data for the week ending Sept. 12 — a full two weeks (14 days) faster than the year before. 

Looking forward, upward price pressure seems likely to continue at least through the fall, thanks to the large, cumulative deficit of inventory. Purchase demand is holding steady at high levels, reflected in strong pending sales data, perhaps due to delayed purchases from earlier this spring and summer. Given that the housing market typically begins to cool off by late August, this stable volume of sales looks even more impressive: pending sales were up a whopping 23.3% in the week ending September 12.

[1]
The Federal Reserve has said it expects to keep interest rates at near-zero through at least 2023, and allow periods of higher inflation, in an effort to revive the economy. This reinforces its commitment to keeping credit flowing using a broad policy toolkit including large-scale purchases of mortgage-backed securities. As such, there is little reason to expect mortgage rates to rise significantly any time soon, which should help keep buyers active.

But while the for-sale market has strengthened since April, the rental market has softened. Annual U.S. rent price appreciation has declined every month since the pandemic began, dropping from 3.8% year-over-year rent growth in February to just 0.7% in August. Median U.S. rent was $1,771 in August, down 0.3% from July, the largest monthly decrease since September 2017.  

Compared to last year, typical rent is down 4.6% in New York, 4% in San Francisco and 3.8% in San Jose. In Boston, the fifth most expensive metro within the top 50, rents are down 2.8% since last year. Typical rents in Washington, D.C., Chicago, Austin, Houston, and Denver also declined since last year.

Meanwhile, rents in Midwestern and Sun Belt cities are making headlong strides upwards. Memphis leads the way with 8.3% rent appreciation since last year, and has seen monthly increases throughout the pandemic. Phoenix rents bounced back with 1.1% month-over-month growth in August after posting negative figures in April and May. 

Methodology

The Zillow Weekly Market Reports are a weekly overview of the national and local real estate markets. The reports are compiled by Zillow Economic Research and data is aggregated from public sources and listing data on Zillow.com. New for-sale listings data reflect daily counts using a smoothed, seven-day trailing average. Total for-sale listings, newly pending sales, days to pending and median list price data reflect weekly counts using a smoothed, four-week trailing average. National newly pending sales trends are based upon aggregation of the 38 largest metro areas where historic pending listing data coverage is most statistically reliable, and excludes some metros due to upstream data coverage issues. For more information, visit www.zillow.com/research/.

Click here to read past editions of Zillow's Weekly Market Report.

 

[1] As with all of our published data, Zillow’s weekly market report metrics are subject to restatement upon further review and with the benefit of more data post-publication. During customary data checks, we discovered that last week’s published data on new listings overstated the true level. This overcount led to an abnormally high week-over-week increase in new listings nationwide and in some large metros. This data has since been restated with corrected estimates in the chart in this week’s release.

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