Home value appreciation, as well as rents, saw a slight slowdown year over year in September, according to the latest Real Estate Market Report from Zillow. Home values in September 2018 increased by 7.6 percent, down slightly from the 7.8 percent growth in September 2017.
Meanwhile, the median rent is down 0.2 percent year over year as of September, down to $1,440. Rent appreciation has slowed for the last seven months before taking a negative turn in September.
Despite the slowdown, high mortgage rates may still keep some potential buyers out of the market. Zillow notes that for many median-priced homes, mortgage rates are growing at twice the rate of home values.
According to Zillow, mortgage rates dropped to 4.5 percent from 4.56 percent month over month, but this is still 75 percent higher than rates were at the beginning of 2018. Additionally, inventory has seen a continual decline, as the number of homes for sale dropped by 1.9 percent in September.
"Today's data are yet another signal that the housing market is easing toward a more normal, sustainable pace after the frenzy of the past three years," said Zillow Senior Economist Aaron Terrazas. "With slowing rents and home value growth, searching for a new home should be somewhat less competitive than it was a year ago, giving renters and buyers a bit of breathing room. Rents remain high by historical standards, but September's modest annual decline in rents should ease some of the pressure pushing higher-income renters to buy. And though home value appreciation is slowing, homes are more expensive than ever, making it difficult for first-time buyers to save for a down payment to break into the market. Housing plays a central role in most people's finances, but for people already in their homes with fixed mortgages, there's minimal spillover. For renters, slower rent growth is welcome news and will put more spending money in their already stretched pockets. The slowdown in new construction is more worrisome for the overall economy: Home building has been a net contributor to economic growth and employment, but rising costs mean that it could shift toward a drag in the future."
Find the full Zillow Real Estate Market Report here.