USA Hot Spot Markets Picking Up Pace

According to a new report by Zillow, after falling for nearly four consecutive years, housing inventory in the USA has turned a corner, growing on an annual basis in four of the past five months. U.S. for-sale inventory has grown 1.2% year-over-year, the first gain since 2014.

Inventory has increased the most in five key West Coast markets that were recently among the nation's hottest, and are now ever-so-slowly tilting the market toward buyers. On an annual basis, inventory has grown 42.9% in San Jose, California, 36.9% in Seattle, 31.9% in San Diego, 29.1% in Los Angeles and 25% in San Francisco.

The second half of 2018 kick-started a period of recovery. Home buyers aren't out of the woods yet however. The number of homes on the market is hesitantly inching higher - now approaching the highest level in a year and a half. In the priciest markets, the jump has been even more definitive. But buyers should not mistake a few more options for a sudden bounty. With home values still increasing at a steady pace, it's clear that demand still outstrips supply, and with mortgage rates down from recent highs, the first quarter of 2019 is shaping up to be more competitive than the lull we saw as 2018 came to a close.

The median U.S. home value is $225,300, a 7.5% year-on-year increase. Home value growth has remained at a steady pace in the 7% range over the past two years though the national numbers obscure substantial differences across the country. Indianapolis and Atlanta experienced the biggest jumps over the past year, with home values increasing by more than 12% in both regions.

Rents have also grown on an annual basis for the third straight month following two months of annual declines, up 2.1% over a year ago to a median of $1,468. This is the largest increase in annual rents since May 2018.