U.S. home values continued to climb in April, increasing 0.5 percent from March to $158,300, according to the April Zillow Real Estate Market Reports. Home values were up 5.2 percent year-over-year, marking the sixth consecutive month of annual home value appreciation at or above 5 percent. The last time national home values were at this level was in June 2004.
A majority (55 percent) of the 365 metros covered saw home values climb in April from March. Of the 30 largest metro areas covered, Sacramento experienced the largest monthly increase, with home values rising 3.4 percent. Other large metro areas with notable monthly increases include Las Vegas (3 percent) and San Francisco (2.8 percent).
“April marks the sixth straight month of annual home value appreciation of 5 percent or above, the longest such streak since the height of the bubble in 2006. In the short term, this has been welcome news for homeowners. But in the long term, this cannot be sustained, and consumers entering the market today should not expect this kind of appreciation to last,” said Zillow Chief Economist Dr. Stan Humphries. “Overall, we expect home value appreciation to moderate as more supply comes on line over the next year, but in some areas, runaway home value appreciation, combined with expected interest rate hikes in coming years, runs a real risk of pricing out many potential buyers. Home values in these areas will have to flatten or even fall to come back in line.”
The Zillow Home Value Forecast calls for 4 percent appreciation nationally from April 2013 to April 2014. Most markets have already hit a bottom — with only 7 out of 251 not projected to hit a bottom within the next year — and 65 out of the 251 markets covered are forecasted to experience home value appreciation of 4 percent or higher. This is a decrease from the 5.2 percent annual rate of appreciation recorded between April 2012 and April 2013, and reflects anticipated shifts in supply and demand in some of the nation’s hard-hit markets.
National rents declined slightly in April compared with March, down 0.2 percent to a Zillow Rent Index of $1,288. Rents were up 3.9 percent in April on a year-over-year basis. Demand for rental housing remains strong, and many investors continue to purchase homes (many times lower-priced homes or distressed inventory) and convert these properties into rental units. As a result, many markets are seeing tight inventory and sharp home value appreciation in part brought on by active investors. Nationally, the number of for-sale listings on Zillow was down 14.4 percent in late April compared with the same period in 2012. Over the course of the month, however, year-over-year inventory constraints did ease slightly, which may indicate more supply slowly coming on line as builders construct more homes and more sellers enter the market.
What are home values and rents doing where you live? Dive into Zillow’s data, available all the way down to ZIP code and neighborhood levels, here.