Dive Brief:

• The U.S. South is taking the reins from the West Coast as the new leader in home-value appreciation, in particular housing markets in Texas, Tennessee and Florida, according to Zillow’s monthly Real Estate Market Report.

• Nashville, TN, posted a 12.4% year-over-year increase in home values to $208,600, and was followed closely by Portland, OR, Tampa, FL, Dallas–Fort Worth, TX, and Orlando, FL, which all saw annual hikes over 10%. 

• Meanwhile, San Francisco and San Jose, CA, which were in the top 10 for home-price appreciation a year ago, have seen the pace of gains slow to 4.4% and 4%, respectively. Nationwide, home values were up 7.2% from a year ago in January.

Dive Insight:

Zillow’s report explores the impact of a demographic shift triggered by high housing costs in and around major metros, particularly the San Francisco Bay Area, Los Angeles and New York. Rapid — and hefty — price increases in secondary markets reflect an influx of population, and builders there are struggling to keep up with demand.

Personal finance website NerdWallet recently named Austin, TX, Denver, Nashville, and Durham, NC, among the 10 most affordable cities with high-paying jobs.

In Texas, home price and sales growth has been robust. A recent report from the Texas Association of Realtors found that the market reached its highest levels on both accounts for the second-straight year in 2016. Home prices in the Dallas–Fort Worth metro area rose 9.4% during the year while sales were up 4.8%. Austin posted similar increases at 7.7% and 4.4%, respectively, during the period. And in Houston, home prices were up 3.8% in 2016 while sales there rose 2.4%.

The robust activity is putting pressure on inventory. The state had 3.3 months of available stock in December, and homes there spent two fewer days on the market than they did a year ago, at 58 days.

Nationwide, according to Zillow, inventory levels in 2016 were down 3% from 2015 with the Midwest cities of Minneapolis, Detroit and Cincinnati posting the most significant declines among the country's top 40 metros. Zillow Chief Economist Svenja Gudell forecasts that home-price appreciation will slow this year as the affordability gap widens and mortgage rates inch back up.

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