U.S. home values dropped for the second month in a row, according to the May Zillow® Real Estate Market Report.

The typical U.S. home is worth $226,800, down 0.1% from a month earlier. Home values also fell in April, ending a streak of 85 consecutive months of gains that added $78,500 in value to the median home. This trend held in 32 of the 35 largest markets in the U.S. – home values rose in St. Louis and Phoenix, and remained flat in Riverside.

While median U.S. home values reach new highs, suburban homes remain less valuable than they were before the Great Recession.
Courtesy Adobe Stock

Year-over-year appreciation, while still strong compared to historic levels, has slowed in each of the past five months, falling to 5.4% growth in May. A year ago, home values grew 7.5% annually. Indianapolis and Cincinnati are the only markets that have accelerated from last May, while San Jose, Calif., remains the lone market to have turned negative year-over-year, falling 5.7%.

"Stepping back to think about housing over the long haul, the current slowdown in home value appreciation is expected and comforting," said Zillow Director of Economic Research Skylar Olsen. "While the slowdown has been arguably abrupt, the soft declines over the past two months should not cause too much alarm. The aggressive pace of home values over the past several years was known to be unsustainable. Buyers simply couldn't afford it, so prices are correcting. The expectation here is that we are steadily returning to normalcy—something U.S. housing hasn't seen in two decades—and that will mean continued, but ever more moderate, volatility. The significant drop in mortgage rates, as well as renewed rent growth, may help return U.S. housing values to positive appreciation earlier than otherwise."

While home value growth has slowed, rent prices are accelerating. The median monthly rent in the U.S. grew for the seventh month in a row, rising 2.7% to $1,479. Rents are growing faster now than a year ago in 28 of the top 35 markets, led by Las Vegas at 8.9%.

Inventory fell 0.5% year-over-year in the U.S., the third straight month of declines after inventory rose in January and February. The most significant drop was in Kansas City, which saw 27.8% fewer homes for sale than this time last year. Inventory growth was largest in Las Vegas and San Jose, both of which among the markets where home value growth has slowed the most in the past year.

Mortgage rates listed on Zillow continued to fall in May. Rates ended the month at 3.87%, down 14 basis points from May 1 and 88 basis points from a peak of 4.75% in November 2018. 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.

Metropolitan Area
Zillow Home
Value Index,
May 2019

ZHVI
Month-
over-
Month
Change

ZHVI Year-
over-Year
Change

Zillow Rent
Index, May
2019

ZRI
Year-
over-
Year
Change

Inventory
Year-over-
Year
Change

United States
$226,800
-0.1%
5.4%
$1,479
2.7%
-0.5%
New York, NY
$442,800
-0.2%
3.8%
$2,413
1.5%
5.1%
Los Angeles-Long Beach-Anaheim, CA
$649,700
-0.2%
1.1%
$2,835
3.1%
16.2%
Chicago, IL
$225,700
-0.3%
2.6%
$1,703
4.0%
5.8%
Dallas-Fort Worth, TX
$242,600
-0.5%
6.3%
$1,651
3.5%
11.0%
Philadelphia, PA
$232,400
-0.4%
2.4%
$1,611
2.7%
-10.9%
Houston, TX
$205,200
-0.2%
3.7%
$1,586
2.3%
4.4%
Washington, DC
$407,500
-0.2%
2.2%
$2,179
2.3%
-24.8%
Miami-Fort Lauderdale, FL
$282,500
-0.5%
4.0%
$1,934
3.8%
5.3%
Atlanta, GA
$219,200
-0.4%
8.3%
$1,462
5.0%
11.1%
Boston, MA
$464,200
-0.6%
3.2%
$2,415
2.4%
13.4%
San Francisco, CA
$944,200
-0.4%
0.6%
$3,458
1.8%
21.4%
Detroit, MI
$162,300
-0.2%
6.1%
$1,229
2.8%
14.7%
Riverside, CA
$370,800
0.0%
4.4%
$2,004
5.8%
2.7%
Phoenix, AZ
$266,900
0.0%
5.5%
$1,464
7.2%
0.9%
Seattle, WA
$490,300
-0.5%
1.2%
$2,245
3.0%
23.9%
Minneapolis-St Paul, MN
$271,200
-0.1%
4.8%
$1,706
4.3%
1.5%
San Diego, CA
$591,000
0.0%
1.2%
$2,660
4.6%
11.5%
St. Louis, MO
$166,900
0.1%
3.8%
$1,163
2.1%
-12.8%
Tampa, FL
$214,500
-0.3%
5.6%
$1,454
4.9%
7.2%
Baltimore, MD
$267,500
-0.3%
1.4%
$1,751
0.7%
-12.2%
Denver, CO
$408,000
-0.3%
3.2%
$2,126
3.7%
25.0%
Pittsburgh, PA
$142,800
-0.5%
2.0%
$1,105
2.4%
-13.2%
Portland, OR
$396,800
-0.3%
2.5%
$1,883
2.6%
4.0%
Charlotte, NC
$209,000
0.0%
8.1%
$1,352
4.6%
8.9%
Sacramento, CA
$411,800
-0.1%
3.6%
$1,927
4.6%
-0.4%
San Antonio, TX
$194,000
-0.1%
5.1%
$1,381
3.4%
17.5%
Orlando, FL
$240,100
-0.2%
7.2%
$1,543
6.8%
6.5%
Cincinnati, OH
$170,100
-0.4%
6.9%
$1,305
2.3%
-5.4%
Cleveland, OH
$145,800
-0.5%
4.1%
$1,171
2.7%
-3.6%
Kansas City, MO
$191,900
-0.4%
6.4%
$1,303
2.9%
-27.8%
Las Vegas, NV
$279,300
-0.4%
7.5%
$1,418
8.9%
41.8%
Columbus, OH
$192,300
-0.3%
6.8%
$1,374
3.1%
-3.1%
Indianapolis, IN
$166,300
-0.3%
9.8%
$1,239
3.5%
N/A
San Jose, CA
$1,176,200
-1.4%
-5.7%
$3,583
2.4%
40.6%
Austin, TX
$311,200
-0.1%
5.3%
$1,724
2.6%
-4.3%