Home-price appreciation sinks to lowest level since 2017

National home-value appreciation hit rock bottom while rent prices rose in February, according to Zillow’s February Real Estate Market Report.

National home-value appreciation sank to its lowest level since December 2017 last month. The median US home value climbed to $226,300, increasing 7.2% year over year.  San Jose, Calif., and San Francisco were most affected by the cooldown, but remained the most expensive markets in the country.

After declining month over month for 44 months, the US for-sale home inventory increased 1% (16,137 homes) year-over-year. This is the fifth month out of the past six in which inventory went up on an annual basis, according to the report. Inventory rose the most in San Jose, Seattle, and Los Angeles, further indicating a cooldown from the frantic pace of last year in major West Coast markets.

On the flip side, February’s mortgage rates listed on Zillow were mostly flat at 4.16%. Rates went down one basis point from the start of the month.

The report also revealed that rent prices rose 2.4% year-over-year in February – the fastest rate in 10 months.

"The rental market spent part of last year catching its breath after several years of breakneck growth," said Jeff Tucker, economist at Zillow. "Landlords are now coming to terms with the fact that rent cannot grow faster than income forever, and after that short correction we can expect a much more vanilla, slow-growth market going forward. As we enter the 2020s, the demand for rentals is projected to fall as many millennials move on to homeownership."

The US median monthly rent slightly increased to $1,472 last month from $1,438 in February 2018. Rents continued to recover after the fall’s slowdown, which saw the first annual price decrease in more than six years.