Home Prices Increase 1.5% Month-Over-Month and 19.9% Year-Over-Year in January

According to Zillow®’s, the Seattle-based online real-estate marketplace company, latest monthly report, home buyers will be facing another difficult shopping season. Home shoppers hoping for an injection of options and relief from heightened competition after December’s inventory drought instead saw the biggest decline in at least three years. Active inventory dropped -13% — the second straight double-digit monthly drop. Though inventory typically dips in the winter, active inventory is now -22% lower than a year ago, and -42.4% lower than January 2020.

The Zillow Home Value Index (ZHVI) reveals that home prices rose 1.5% from December to January to $325,677, up 19.9% from a year ago. The annual growth rate represents an all-time high over the last 20 years, and the monthly pace continued to accelerate after reaching a low of 1.2% in November. If monthly price growth were to hold steady at January’s pace, annual growth in 2022 would be 19%. Home values are up 30.9% — nearly $77,000 — since January 2020, on the eve of the pandemic.

On the positive note, the report noted that monthly rent growth slowed dramatically, falling from 0.9% in November and December to a nearly flat 0.1% in January, the lowest rate seen since October 2020. Year-over-year rent growth was 15.9%, slightly lower than a record-high 16% in December, making typical rent $1,856 per month.

In remarks prepared to accompany the release of ZHVI, Jeff Tucker, senior economist at Zillow said, “Home buyers today are making bids and closing deals despite some of the most challenging conditions ever: record-few homes for sale to choose from, priced at double-digit gains from last year, financed at sharply rising mortgage rates. it remains to be seen how long buyers can weather this storm, and how long homeowners will watch values rise before deciding to list. Neither have blinked yet. Expect another sizzling hot spring shopping season.”

Tucker added, “If supply chains can untangle, builders should be able to complete and sell more homes this year than last.”