Mortgage rates are creeping higher, yet the U.S. real estate market is still breaking records.
Home values on average jumped almost 20% in the past year, the most ever, according to a new report from Zillow. A typical house is now worth $320,662 — an increase of more than $50,000 from December 2020.
After two years of surging prices for homes across the country, anxious buyers had hoped 2022 would bring some relief, as policy makers plan interest rates hikes that could cool down the market. That’s yet to happen though, with strong demand from millennials and a shortage of available homes still propping up prices. Mortgage rates just reached their highest level since the pandemic began, but at 3.56% are still historically low.
“Neither high prices nor slim inventories have deterred buyers so far,” Jeff Tucker, senior economist at Zillow, said in the report.
Although month-over-month home values had decelerated since July, they jumped 1.2% in November and 1.4% in December. There’s also now a record low number of available properties — only 923,000 homes, down almost 20% since December 2020. When compared with December 2019, that’s a 40.5% decrease.
And for those who can’t afford to purchase a home, there has been some relief in rent prices. Monthly growth in December was 0.7%, the lowest increase since February. Still, rents are up 15.7% year-over-year, with the average renter now paying $1,855 each month.
Rents rose in all 50 of the largest metro areas in the U.S., led by Miami, Tampa, Phoenix and Las Vegas.