October Marks 12th Consecutive Month of National Home Value Increases

Posted by: Stan Humphries    Tags:      Posted date:  November 20, 2012  

Zillow’s October Real Estate Market Reports, released today, show that national home values rose 1.1% from September to October to $155,400 (Figure 1). This is the largest monthly increase since August 2005 when home values rose 1.2% month-over-month. October 2012 marks the 12th consecutive month of home value appreciation, further evidence of a durable housing market recovery. On a year-over-year basis, home values were up by 4.7% (Figure 2) in October 2012 – a rate of annual appreciation we haven’t seen since September of 2006, before the peak of the housing bubble. Rents declined in October, depreciating by 0.1% from September to October. On an annual basis, rents across the nation were up by 5.4% (Figure 3). The Zillow Home Value Forecast, which is now available on a monthly basis, calls for 1.5% appreciation nationally from October 2012 to October 2013. Most markets have already hit a bottom and 40 out of the 256 markets covered are forecasted to experience home value appreciation of 3% or higher.

Home Values

The October Zillow Real Estate Market Reports, the first indication of October national home value trends anywhere, cover 366 metropolitan and micropolitan areas, more markets than any other freely available source of real estate data. In October, 276 (75%) of the 366 markets showed monthly home value appreciation, and 228 (62%) of the 366 markets saw annual home value appreciation. Among the top 30 metros, 29 experienced monthly home value appreciation and 26 saw annual increases. The only monthly decline among the top 30 metros took place in Chicago, where home values fell by 0.2% from September to October. Leading the pack in positive appreciation were Sacramento, Phoenix and Columbus, which experienced 2.1%, 2.0% and 1.6% monthly home value appreciation, respectively. Overall, national home values were down 19.8% from their peak in May 2007 and up 4.7% from the post-recession trough in October 2011 – exactly a year ago.


The Zillow Rent Index (ZRI) covers 449 metropolitan areas and shows year-over-year gains for 294 metropolitan areas covered by the ZRI. Even as the housing market picks up steam again, the rental market remains strong (Figure 3). Markets that saw extremely strong annual rent appreciation include Indianapolis (10.7%), Austin (9.5%), Chicago (9.5%), Baltimore (8.7%) and San Francisco (7%). Among the top 30 metros, Las Vegas saw rents depreciate on a year-over-year basis by 1.8 percent even while home values steadily appreciate, currently growing at 8.6 percent annually.


The rate of homes foreclosed continued to decline in October with 5.57 out of every 10,000 homes in the country being liquidated. Nationally, foreclosure re-sales continued to fall, making up 12.9% of all sales in October (Figure 4). This is down 3.4 percentage points from October 2011. We do not believe that an expected increase in foreclosure re-sales towards the end of this year due to seasonality (as the overall volume of sales will decrease, foreclosure re-sales will make up a larger percentage of sales) will cause monthly home value trends to go negative on a consistent basis, although they will create some monthly volatility and keep a lid on near-term home value appreciation.


The housing recovery is continuing to show consistent annual appreciation, albeit slightly slower than “normal” growth rates, in a majority of markets across the nation. The Zillow Home Value Forecast calls for 1.5% appreciation nationally from October 2012 to October 2013. Most of the markets for which we produce a forecast have already hit a bottom, with only 19 out of 256 not projected to reach a bottom within the next year. Among the top 30 metros, only New York has not reached a bottom yet.  Negative equity is now below 30 percent (28.2%) nationally and is trending down. The year-end “fiscal cliff” is a risk factor in our forecast, as it will likely create uncertainty with consequences for consumer confidence and employment growth and, if not successfully navigated, will create real disruptions in the economy. We know from the debt ceiling debate last year that general economic uncertainty can sap consumer and employer confidence, which affects job growth and household formation and, in turn impacts home sales and, ultimately, home values.

A PDF version of this full report can be downloaded here.

About the author
Stan Humphries
Stan is Zillow Group's Chief Analytics Officer. To learn more about Stan, click here.