Home values across the U.S. were still 6.2% higher than a year ago in January, but slower price growth in some of the nation’s most popular markets led to a slight uptick in buyer activity. After soaring to unsustainable levels during the pandemic, home prices are beginning to taper off in red-hot homebuying destinations such as San Francisco, which saw a 4.9% drop at the start of 2023, Zillow reports.
Though prices remain historically high, the typical U.S. home value fell a modest 0.1% from December to January. While a slight increase in affordability is promising, buyers are still confronting a severe shortage of for-sale housing, the second lowest January level on record, to be exact.
Falling mortgage rates in the new year provided encouragement and incentive for buyers to return to the market in force: average 30-year mortgage interest rates had fallen from 6.44% to 6.10% over the month of January, helping to shrink some of the affordability challenges that deterred home shoppers throughout the second half of last year. The monthly cost of a 30-year mortgage to buy a home priced at the national ZHVI level, with a 20% down payment, stood at $1,595 in January, almost 10% less than the comparable cost at its peak in October ($1,764).
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