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The housing inventory shortage this summer drove home values up 0.7% in August from July 2020, the biggest month-over-month increased in nearly seven years, according to Zillow's Real Estate Market Report for August.
Additionally, the report revealed that home value growth increased last month in 48 out of the 50 largest markets in the U.S. According to Zillow, home values are up 5.1% in August, year-over-year.
One thing the rise in home values shouldn't do is affect the ability of first-time home buyers to make down payments. While the value increases may be significant, in actual dollars the impact isn't that painful.
"American home shoppers faced a historic shortage of listings to choose from this summer, and that scarcity is now reflected in rapidly appreciating home values after a sluggish start to the home shopping season this spring," said Zillow economist Jeff Tucker. "Builders are racing to catch up with demand, and rising prices should encourage more potential sellers to come off the sidelines and list. Still, the shortage of inventory should keep housing markets unusually tilted in sellers' favor this autumn."
Demand is continuing to outpace supply as homes continue to sell at a record pace. Zillow predicts that the increase in home prices will continue until at least through fall, with purchase demand holding steady.