US home values drop after 7 years of record highs

The median US home value declined from March to April, the first month-over-month drop since February 2012, according to the Zillow Real Estate Market Report.

The value of a typical US home dropped 0.1% last month to $226,800. The decline followed the seven-year streak of record-high home value gains. The only declines in US home values over the past few decades were during the recession in the early 1990s and the Great Recession and housing crisis in the late 2000s.

"The widespread decline in home value growth in April – the first in many years – will turn heads,” said Zillow Director of Economic Research Skylar Olsen. “But it's too early to say if we've hit another national home value peak and are at the beginning of a sustained downturn, or if this is just a bump in the road.” 

In 32 of the 35 largest housing markets, home values sank over April and moderated in two others. The only state where home values appreciated during the month was in Riverside, Calif., according to the report. Other large Californian markets have seen longer-term downturns in the past three months, including San Jose, San Francisco, San Diego, and Los Angeles.

“Month-over-month numbers are volatile, and this small decline could reverse itself before the year is out and before national home values go negative on a year-over-year basis,” said Olsen. “That said, the likelihood that home values have peaked in several local markets is real. The price correction in these areas should continue after years of significant home value growth that substantially outpaced income growth."

The April Zillow Real Estate Market Report also found that:

• Home values have likely peaked in Baltimore, Boston, Houston, Los Angeles, Miami, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, San Jose, Seattle, St. Louis, and Tampa
• Inventory fell 1.7% year-over-year in the US. The percentage of homes for sale in Washington, D.C. declined 31.7% over the same period a year ago
• Despite the drop nationally, housing inventory has grown significantly in expensive West Coast markets like San Jose, Seattle, and San Francisco due to cooling demand
• Mortgage rates listed on Zillow rose slightly in April. Rates increased to 4.17% from 4.06%, up for basis points
• The growth of rent prices continued to rise for the sixth month in a row. The median US rent climbed 2.6% year-over-year to $1,477. Las Vegas, Phoenix, and Orlando saw the fastest rises, increasing of 7.8%, 6.7%, and 6.4%, respectively