Inside America's Housing Boom

Home values continue to rise at a historic monthly pace, growing 1.1% from December to January

- Zillow economists predict 7 million home sales this year, nearly 25% more than in 2020

- Phoenix is booming, recording the highest annual growth in both home values (17.1%) and typical rent (8.4%) among the nation's largest metros

- Home values rose 9.1% from a year ago, the fastest pace of annual appreciation since 2006

Extreme demand driven by exceptionally low mortgage rates, demographic pressures and pandemic trends kept the housing market boiling as we moved into 2021, according to Zillow's® latest market report. 

Zillow logo (PRNewsfoto/Zillow Group)

Monthly appreciation of home values in January matched recent record highs, while annual growth is higher than any time since 2006. Home sales are moving briskly, with homes typically staying on the market for 18 days as of mid-January before the seller has accepted an offer from a buyer -- 28 days faster than in 2020 and 2019. For-sale inventory declined again in January, and now stands 26.3% below levels from a year ago.

The Zillow Home Value Index (ZHVI) rose to $269,039 in January, up 1.1% month over month, matching December's all-time record for monthly growth in data reaching back to 1996. Annual home value appreciation was 9.1% -- the largest annual growth recorded since June 2006, before the Great Recession.

"Homebuying demand has pushed the pedal to the metal for price appreciation this winter," said Jeff Tucker, senior economist at Zillow. "Normally we'd be talking about the spring selling season ramping up, but it looks more like last summer's selling season simply never ended. Buyers eager to secure more space and lock in today's rock-bottom interest rates are having to move quickly and aggressively to win out in this competitive market."

Home values rose in all 50 of the largest U.S. metros, with the most drastic yearly growth in Phoenix (17.1%), San Jose (14.2%) and Austin (13.7%). The slowest growth -- a relative term in this case -- was seen in San Francisco (5.3%), Chicago (6.7%), and San Antonio (6.7%). 

A few major demand drivers are keeping competition high and the market hot through the customarily cool winter. For one, a wave of millennials are now entering their peak home-buying years. The number of Americans aged 25-34 was 12% higher in July 2020 than July 2010, according to Census estimates -- an increase of approximately 4.9 million people. 

Another is mortgage rates, which averaged 2.74% for a standard 30-year fixed in January -- up slightly from a historic low of 2.68% in December. These rates are making monthly mortgage payments more affordable as a percentage of income, even when considering rising prices. 

The COVID-19 pandemic and widespread changes to work-from-home policies have also pushed many to reconsider what they want and need in their living space, and where it should be. 

Looking forward, Zillow economists expect home values to grow 10.1% in the next 12 months. The Zillow forecast for existing home sales has been revised up since December, driven by improved pending sales volumes and home purchase applications. Existing home sales are expected to reach 7 million in 2021, 24.8% more than in 2020. 

While home prices are rising quickly, rents are relatively stagnant. The Zillow Observed Rent Index (ZORI) was $1,721 in January, just 0.5%, or $9, higher than in January 2020 and up 0.3% month over month. 

Rents in many expensive, coastal metros are currently much lower than a year ago -- down 9.2% in San Francisco, 8.8% in New York, 7.2% in San Jose, and 6.3% in Boston. Many Sun Belt and Midwest metro areas, on the other hand, saw solid rent growth. Phoenix led the largest 35 metro areas with 8.4% annual rent growth, followed by Sacramento (7.6%) and Indianapolis (6.9%).

Metropolitan Area*

Zillow Home Value Index, January 2021

ZHVI - YoY Change, January 2021

Zillow Observed Rent Index, January 2021

ZORI - YoY Change, January 2021

United States

$269,039

9.1%

$1,721

0.5%

New York, NY

$516,732

7.7%

$2,465

-8.8%

Los Angeles-Long Beach-Anaheim, CA

$748,532

9.6%

$2,542

-0.8%

Chicago, IL

$259,459

6.7%

$1,614

-2.9%

Dallas-Fort Worth, TX

$273,348

7.9%

$1,555

2.0%

Philadelphia, PA

$277,775

10.6%

$1,578

2.3%

Houston, TX

$231,195

7.0%

$1,464

0.4%

Washington, DC

$475,850

8.6%

$2,006

-3.4%

Miami-Fort Lauderdale, FL

$323,431

7.7%

$1,913

2.1%

Atlanta, GA

$264,565

9.7%

$1,602

5.7%

Boston, MA

$539,592

9.4%

$2,277

-6.3%

San Francisco, CA

$1,178,615

5.3%

$2,876

-9.2%

Detroit, MI

$198,979

10.3%

$1,293

6.1%

Riverside, CA

$433,226

11.7%

Phoenix, AZ

$335,975

17.1%

$1,572

8.4%

Seattle, WA

$594,223

12.8%

$1,866

-5.5%

Minneapolis-St Paul, MN

$320,438

8.6%

$1,543

0.8%

San Diego, CA

$689,361

13.5%

$2,383

4.3%

St. Louis, MO

$197,073

9.0%

$1,093

3.8%

Tampa, FL

$257,499

12.8%

$1,589

6.6%

Baltimore, MD

$319,175

8.2%

$1,646

2.2%

Denver, CO

$488,746

9.0%

$1,709

0.1%

Pittsburgh, PA

$178,282

10.4%

$1,177

1.2%

Portland, OR

$458,486

9.7%

$1,649

1.2%

Charlotte, NC

$265,397

10.9%

$1,514

3.1%

Sacramento, CA

$478,817

11.3%

$1,916

7.6%

San Antonio, TX

$222,816

6.7%

$1,330

2.5%

Orlando, FL

$276,168

7.5%

$1,594

2.2%

Cincinnati, OH

$208,352

12.0%

$1,259

5.5%

Cleveland, OH

$176,069

11.1%

$1,121

3.7%

Kansas City, MO

$227,059

10.6%

$1,193

5.0%

Las Vegas, NV

$315,966

8.0%

$1,493

6.7%

Columbus, OH

$234,276

10.8%

$1,278

5.2%

Indianapolis, IN

$204,141

11.3%

$1,262

6.9%

San Jose, CA

$1,314,799

14.2%

$2,892

-7.2%

Austin, TX

$384,446

13.7%

$1,511

-1.2%

Virginia Beach, VA

$264,060

8.3%

$1,376

6.1%

Nashville, TN

$304,571

8.9%

$1,595

1.9%

Providence, RI

$357,761

12.0%

$1,603

8.2%

Milwaukee, WI

$219,381

12.1%

$1,169

2.7%

Jacksonville, FL

$252,678

9.4%

$1,370

5.6%

Memphis, TN

$174,063

11.3%

$1,337

10.0%

Oklahoma City, OK

$170,138

7.5%

$1,098

3.9%

Louisville-Jefferson County, KY

$197,548

8.7%

$1,044

4.7%

Hartford, CT

$260,546

9.5%

$1,353

5.0%

Richmond, VA

$268,405

8.4%

$1,294

4.8%

New Orleans, LA

$224,193

7.9%

$1,290

3.8%

Buffalo, NY

$193,583

11.4%

$1,124

5.3%

Raleigh, NC

$307,481

8.8%

$1,503

2.6%

Birmingham, AL

$188,327

9.8%

$1,129

5.5%

Salt Lake City, UT

$436,390

13.7%

$1,408

3.3%

*Table ordered by market size 

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.