Rising home prices spark a boost in housing supply
As inflating home prices hampered sales in recent years, housing inventory finally shows signs of bouncing back, according to Zillow.
The housing deficit has been the biggest impediment to the market and a major part of why affordability cratered. The ulterior benefit of that means more houses coming to market — including in some of the most popular metro areas.
Nationwide, homes for sale increased 3% year-over-year in October 2018. Meanwhile, the inventory in San Jose, Calif., skyrocketed by 93.1%, San Diego's grew 43.5% and San Francisco's climbed 41.6% since October 2017.
"In yet another sign that the housing market is cooling, we're finally starting to see inventory return after several years of annual declines," Aaron Terrazas, Zillow senior economist, said in a press release. "The combination of tight supply and strong demand have pushed up home values in recent years, but markets always ebb and flow and there is no doubt that the tides that have buoyed sellers are shifting."
Median home value rose to $221,500 in October, up 7.7% from a year ago, matching the same growth rate from the month prior.
"Buyers are not out of the woods yet: While there are more homes for sale, rising mortgage rates are quickly eating into what they can afford to pay," Terrazas added. "First-time buyers have benefited from flat or falling rents over the past year — making it somewhat easier to save for a down payment — but the decline in rents could be short-lived if higher buying costs push some people back toward the rental market."
While home values continue their steady growth, median rent actually edged down 0.1% year-over-year, marking the second month in a row it waned.