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The housing market has continued on its path of record-breaking growth since June, according to the latest Zillow® Real Estate Market report.

In September, the typical home value increased to $259,906—that’s a jump of 0.8 percent month-over-month (the biggest since November 2005) and an annual increase of 5.8 percent (the largest in almost two years).

Home values have increased in every major U.S. metro compared to the previous month, according to Zillow. In September, they increased 0.5 percent in Orlando and 1.5 percent in San Jose. In terms of annual growth, Phoenix was at the top with an increase of 11.7 percent, followed by San Jose at 11.5 percent and Seattle at 10.7 percent.

Median list prices are also up (11.6 percent YoY nationally). And home values continue to accelerate due to a persistent inventory shortage. Zillow predicts that seasonally adjusted home values will increase 2.9 percent more through the end of 2020 and 7 percent in the year.

“Home values are accelerating more quickly than any time since 2014, marking a sharp turnaround from a market briefly put on hold during the outbreak of the pandemic this spring,” said Zillow senior economist Jeff Tucker. “The historic shortage of homes available for sale has boosted home price appreciation, now that buyers are waging bidding wars for the few options left. Builders are racing to fill the gap, and we may see more listings next year if nervous sellers become reassured, but this shortage of homes is so deep that any reversal would take at least several months.”

As for the rental markets, Zillow found that rent erosion continues in metros with the highest rents, decreasing 6 percent since 2019 in New York, 5.9 percent in San Francisco and 4.5 percent in San Jose. On a monthly basis, the biggest decreases were in Boston (-2.1 percent), San Francisco (-2.1 percent) and New York (-1.8 percent). Across the Midwest and Sun Belt, however, rents continue to rise, with the highest annual growth happening in Memphis (8.7 percent), Phoenix (7 percent) and Riverside (6.9 percent).

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