Dive Brief:
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Home values in the U.S. rose 6.5% year over year to $192,500 in November, their fastest annual pace since 2006, according to the latest Zillow Home Value Index.
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For-sale inventory dropped 5.9% year over year in November, which was the 22nd-straight month of diminishing inventory levels and is the lowest number recorded by Zillow since it started tracking in January 2010.
- Inventory conditions in the top 35 metros analyzed, as well as nationally, were at least 25% below highs recorded since January 2010.
Dive Insight:
The common refrain among recent economic reports is echoed in Zillow’s latest output: home prices are increasing, inventory is tightening and even in markets that are adding back stock, the volume is still relatively low.
Projections from the latest CoreLogic Home Price Index put home prices up 4.6% from October 2016 to October 2017, which is down from the 5.2% year-over-year gain forecast in September.
Industry observers are eyeing the entry-level new homes category as a likely way to boost inventory while softening price growth and meeting the needs of the emerging first-time buyer segment. However, a new report from real estate website Trulia found starter home inventory down 12.1% in the third quarter – the biggest drop in three years.
The market is not expected to weaken heading into next year, but there are growing expectations that price growth could slow in the wake of a 50-basis point rise in mortgage interest rates since November, while a decision by the Federal Reserve last week to increase benchmark interest rates could further impact the volume of existing homeowners looking to qualify for or refinance a mortgage and raise borrowing costs for homebuilders.
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