Housing market set for 'normalcy' for first time in two decades: Zillow

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Monthly home price appreciation turned the corner into negative territory, with values down for the second straight month in May, according to Zillow. Before April, property values grew for 85 months in a row, adding $78,500 atop the nation's median home price.

"The aggressive pace of home values over the past several years was known to be unsustainable. Buyers simply couldn't afford it, so prices are correcting. The expectation here is that we are steadily returning to normalcy—something U.S. housing hasn't seen in two decades—and that will mean continued, but ever more moderate, volatility," Skylar Olsen, director of economic research at Zillow, said in a press release. "The significant drop in mortgage rates, as well as renewed rent growth, may help return U.S. housing values to positive appreciation earlier than otherwise."

While only down 0.1% in May from April, a decline in house values is a welcome sign for homebuyers and could signal more entrants to the housing market. This comes as the country's median monthly rent continues climbing for the seventh consecutive month to $1,479 — which is also up 2.7% annually—and further incentivizes consumers to buy a house.

The typical home is now worth $226,800; while still up in May from a year ago, the 5.4% annual growth rate slowed, and is lower than the 7.5% rate of appreciation experienced in May 2018.

"Stepping back to think about housing over the long haul, the current slowdown in home value appreciation is expected and comforting. While the slowdown has been arguably abrupt, the soft declines over the past two months should not cause too much alarm," Olsen said.

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Home prices Housing market Real estate Purchase Mortgage rates Housing affordability Zillow