For First Time in 5 Years, Buyers Have More Selection to Start the Year (January 2019 Market Report)

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  • U.S. for-sale home inventory increased 1.2 percent from a year ago. The largest inventory increases were seen in softening but still competitive West Coast markets.
  • The typical U.S. home was worth $225,300 in January, 7.5 percent more than a year ago.
  • The median rent rose 2.1 percent over a year ago to $1,468, the third straight month of accelerating appreciation.

January marked the reversal of a longstanding trend in the housing market – a modest annual gain in for-sale inventory last month means that for the first time in at least a half decade, the U.S. housing market began the calendar year with more homes available for sale than the year prior.

There were slightly more than 1.6 million U.S. homes listed for sale on Zillow in January, up 1.2 percent from a year ago and the first annual gain recorded in January since prior to 2014,[1] according to the January Zillow Real Estate Market Report.[2] The small bump in inventory to start the year may give those buyers eager to get an early jump on the spring home shopping season some reason for optimism after years of consistent inventory declines, though inventory levels overall remain constrained.

Inventory fell year-over-year for 44 straight months beginning in January 2015, before reversing course in September 2018. It has since grown on an annual basis in four of the past five months, though at a fairly tepid pace. And inventory remains far below peak levels: The 1,618,058 U.S. homes for sale in January is down more than 20 percent from the recent high of more than 2 million set in July 2014.

Inventory remains below peaks reached in the past five years in all 35 of the nation’s largest markets for which we have adequate inventory data – in many cases far below. January inventory was more than 20 percent below recent peaks in 24 of these 35 markets, and less than 10 percent below peak in just seven.

Still, inventory did rise year-over-year in 28 of those 35 large markets, and many are adding inventory at a rapid pace, especially a handful of previously red-hot West Coast markets. On an annual basis, January inventory grew 42.9 percent in San Jose, Calif. (904 more homes available for sale in January 2019 from January 2018), 36.9 percent in Seattle (3,324 more homes), 31.9 percent in San Diego (2,450 more homes), 29.1 percent in Los Angeles (6,682 more homes) and 25 percent in San Francisco (1,556 more homes). Recent rapid growth in inventory is putting many of these areas closer to recent peak levels: Inventory is less than 10 percent below recent peaks in Los Angeles and San Jose, and is just 2.3 percent below the peak in San Francisco.

For the past several years, many homebuyers may have felt they couldn’t catch a break as the number of homes available for sale continued to shrink each passing month. But something shifted during the second half of 2018, and while home buyers aren’t yet out of the woods there is a glimmer of light on the horizon. The number of homes on the market is hesitantly inching higher – now approaching the highest level in a year and a half. And in the priciest markets, the jump has been even more definitive.

But buyers should not mistake a few more options for a sudden bounty, and this latest growth spurt in inventory has done little to cool rapid home value appreciation that has been driven in large part by high demand from buyers and limited availability of homes for sale. The median U.S. home value in January was $225,300, up 7.5 percent year-over-year. Annual U.S. home value growth has remained steady in the seven percent range over the past two years, though the national numbers obscure substantial differences across the country.

Home values were up year-over-year in each of the country’s 35 largest markets. Indianapolis and Atlanta experienced the biggest jumps over the past year, with home values increasing by more than 12 percent in both metros.

Rents also continue to grow. The U.S. median rent rose to $1,468/month in January, up 2.1 percent from a year ago, the largest annual increase in rent since May 2018 and the third straight month of annual growth after a brief flattening and decline in August, September and October 2018. Rent increased or remained flat in all major metros, with Orlando (up 7.4 percent) experiencing the biggest increase. On the other end of the spectrum, rents were flat in Portland over the past year.

Mortgage rates on Zillow ended January at 4.14 percent,[3] the lowest rate of the month. On January 1, rates began the year at their highest point, 4.3 percent. By the end of January, mortgage rates had retreated 61 basis points from their most-recent November 2018 peak.

Lower rates headed into the spring home shopping season may give buyers slightly more wiggle room in their budgets, helping to keep monthly mortgage payments more manageable even as home prices themselves continue to rise. But the benefit of lower rates may prove to be a double-edged sword for buyers – lower rates do boost affordability, but may also drive more buyers into the market, creating a more competitive environment than the brief lull the market experienced as 2018 came to a close.

[1] Zillow inventory data begin in January 2013, so year-over-year calculations for the month of January are only available beginning in January 2014.

[2] The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The data in Zillow’s Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas, in many cases dating to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder’s office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at

[3] Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect the most recent changes in the market.

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