Zillow has lowered its assessment of home values nationwide as the market continues to muddle through an ongoing slowdown in real estate.

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For the second consecutive month, Zillow has dropped its national estimate of home values amid the ongoing market slowdown.

The Zillow Home Value Index declined by 0.3 percent from July to August, following a 0.1 percent decrease that occurred the month before. Home values in August were still 14 percent higher than they were at the same time last year.

It has been more than a decade since home values fell this much in a single month, according to a Zillow news release. Not since 2011 has the company seen a monthly drop this large in its home-value index, which is based on the company’s Zestimate metric for the middle tier of U.S. homes.

The Seattle-based listing giant’s research team argues that the erosion of home affordability is a clear factor weighing down home demand.

“Affordability is driving market momentum: Low-cost markets remain competitive while prices drop the fastest in both the most expensive markets and those that witnessed the strongest appreciation during the pandemic,” the report reads.

Amid a still-high home price environment, buyers are also having to navigate volatile mortgage rates.

The ups and downs in mortgage rates mean that some buyers who qualified for a loan last week may not qualify now, according to Zillow Chief Economist Skylar Olsen.

“Even buyers able to afford a house at current rates could feel frozen, waiting for mortgage rates to fall dramatically again, like they did from the end of June to mid-July, when rates dropped 50 basis points in just two weeks,” Olsen said in the report.

More than half of American households would need to commit 30 percent of their income to purchase the typical American home in August. That’s a level traditionally defined as “cost-burned” by government agencies and mortgage lenders. 

This new reality is the result of nearly three years of fast-paced growth in home prices in the early months of the pandemic when mortgage rates were in decline. Affordability was then exacerbated by a quick rebound in mortgage rates in the early months of 2022.

The typical mortgage payment — just under $900 per month in August of 2019 including insurance and taxes — is now higher than $1,600, Zillow’s report says.

At the same time, improvements in the overall supply of homes for sale since the start of the year may also be starting to moderate.

Inventory, which had been replenishing at a fast clip in the first half of the year, grew by only 1 percent from July to August. That’s the smallest monthly increase since February.

“A significant decline in the flow of new listings to the market over the past two months indicates that the slight rise in total inventory is the result of homes taking longer to sell, rather than extra selling activity,” the report reads.

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