Home value appreciation had been accelerating on a monthly basis since January but finally slowed, moderating from 1.97 percent month-over-month growth in July down to 1.75 percent growth in August, according to a Zillow report. Even so, it still represents the third-largest monthly growth in Zillow records.
“The strong recovery of inventory and initial lift off the gas pedal for home value appreciation is indicative of balance returning to the market,” Zillow Economic Data Analyst Nicole Bachaud said in a release. “But, the major demand drivers that have pushed the market to extremes this year are still present — we're moving from a white-hot midsummer to somewhere closer to red hot as we head into the fall.”
The deceleration of home value growth is widespread, with 43 of the 50 largest major metros seeing appreciation slowdown in August, compared with 20 in July. The largest drop-offs were in Buffalo, San Diego, San Francisco, and Austin.
Still, home values are up a record-breaking 17.7 percent ($45,557) from a year ago, bringing the typical home value to $303,288. Top metros for annual growth are Austin (44.8 percent), Phoenix (31.8 percent), Salt Lake City (27.9 percent) and San Diego (26.9 percent).
Available housing inventory continued to rise for the fourth straight month, growing 4.1 percent over July. The share of listings with a price cut rose for the fourth consecutive month, according to the report. It grew 1.9 percentage points in August, with 12.3 percent of listings seeing a price reduction before an offer is accepted. In August 2019, the share was 17.4 percent.
“Another month of rising for-sale inventory gives shoppers more options to choose from and less competition, which should help reduce bidding wars and further moderate rampant price hikes,” Bachaud said. “A slightly less frenzied market means buyers have a much better chance to land the home they're bidding on and may even see a price drop on their saved listings, but keep in mind the market is still much hotter than normal for this time of year.”
Home sales have been rising monthly since March and continued to grow, with monthly sales in August up 3.9 percent year-over-year. Zillow economists are expecting 5.93 million sales in 2021, a 5.1 percent increase over a historically strong 2020.