Despite higher prices, demand remains high as low mortgage rates keep homes affordable
The national median home value increased 6.9% year-over-year in September to $202,700, representing the 62nd consecutive month of annual growth, according to the Zillow Home Value Index.
Zillow found that among the 35 largest metro areas, the fastest appreciations in home values over the past year were in Seattle, Wash., and San Jose, Calif. Home values increased 12.4% year over year in Seattle, while San Jose recorded a 10.3% growth in home values. Las Vegas, Nev., Charlotte, N.C., and Orlando, Fla., round out the top five fastest-growing metros with growths of 10.2%, 9%, and 8.9%, respectively.
Home values continue to increase given tight inventory and strong demand, according to Zillow. Compared to the same period a year ago, there are 12% fewer homes to choose from. San Jose, Seattle, and San Diego all recorded significant declines in overall inventory over the past year. There are 60% fewer homes on the market in San Jose, while Seattle and San Diego each have 35% fewer homes for sale.
Zillow said demand remains high and homes continue to be affordable for purchase despite rising prices because of low mortgage interest rates. The low rates keep monthly costs for a home purchase affordable, with the share of income needed to afford a typical mortgage nationwide much lower than historical levels.
Mortgage rates were at 3.7% at the end of September, the lowest month-ending rate since May. The September high was recorded in the last few days of the month at 3.72%, while the month low was 3.56%.
