Continued torrid growth in the housing market paired with a long-awaited bump in inventory in May, according to Zillow’s latest Market Report. Home value appreciation — particularly Phoenix home values — continues to break records and typical time on market is down to just six days. Meanwhile, rents are rising quickly across the U.S., breaking out after growth was stymied under the pandemic.

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Inventory is finally showing signs of recovery at the national level after nearly a year of steady decline. The 3.9% month-over-month gain in May is the first uptick since July 2020 and only the fifth seen in the last 24 months. Of the top-50 largest U.S. markets, only six saw inventory fall from April. Inventory across the U.S. is down 31.2% since May 2020, an improvement over the 32.8% annual decline seen in April. New inventory has trended up since mid-March. 

In the Phoenix Metro market:

• The typical home is now worth $367,484, up 23.5% over the past year and 3% since April.

• Typical rents are $1,620, up/down 17.7% year over year and 4.6% since April.

• Inventory is up 1.6% from April. It’s down 25.3% year over year.

• Homes are typically staying on the market for 7 days before going under contract.

• 40% of homes sold above list price in March (the most recent data available), compared to 14% that sold above list in March 2020.

“Despite extremely strong demand for homes in this red-hot market, a steady increase in new listings appears to have finally started turning the tides, bringing a long-anticipated turn toward more choices for buyers,” said Treh Manhertz, Zillow economist. “Builders are rushing to churn out new homes, while widespread vaccinations and improved confidence in the economy should help current owners feel more comfortable listing their homes for sale.” 

However, the typical time for a newly listed home to go under contract dropped to just six days nationwide, one day shorter than in April. Time on market is the shortest at three days in hot Midwest metros of Cincinnati, Kansas City and Columbus. 

Annual home appreciation reached 13.2% in May while monthly growth was 1.7%, both of which are new records within Zillow data reaching back through 1996. Typical home values now stand at $287,148. Month over month growth accelerated in 47 of the 50 largest U.S. markets and decelerated in just three — roughly matching the local market heat in April.  

Austin retained its lead in annual appreciation with a blistering 30.5% increase over 2020, followed by Phoenix (23.5%) and Salt Lake City (20.6%). Even the metros with the lowest annual appreciation — Orlando, New Orleans and Oklahoma City — still put up historically strong numbers above 9%. 

Typical rents rose substantially, accelerating from 1.3% monthly growth in April to 2.3% in May — the largest monthly appreciation since 2015. Rents hit $1,747 in May, up 5.4% or $89 over last year. Rent appreciation is especially strong in the Inland West. Of the 100 largest U.S. metros, the top eight for annual rent growth are Boise, Phoenix, Spokane, Las Vegas, Riverside, Stockton, Fresno, and Albuquerque — all with increases higher than 15%.

The list of major cities with lower rents than last year shrank again, as Seattle and Chicago clawed into the green. Only the expensive coastal metros of San Francisco, San Jose, New York, Boston, and Washington D.C. remain in the red.  

Zillow economists forecast home values to increase by 14.9% by May 2022, an upward revision from the April forecast. Home sales are expected to reach 5.91 million in 2021, a 4.8% increase over 2020. 

Mortgage rates listed by third-party lenders on Zillow began May at a monthly high of 2.69%, dropped down to a mere 2.63% on May 7 and 10 — close to all-time lows — and ended at a monthly high of 2.84%. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market.