Homes across the US had a median value of $203,400 during the month, according to the Zillow Home Value Index. This represents an increase of 6.5%, or $12,500, from the same period last year.
San Jose, Calif., recorded the biggest gain in home values compared to last year. The metro area posted as 12.3% increase from October 2016 home values, which translates to a $118,200 gain. Other metros that recorded double-digit appreciations were Seattle at 11.7% and Las Vegas at 11.2%.
According to Zillow, the number of homes for sale fell 11.7% over the same period. San Jose has 60.4% fewer homes year over year, the most significant drop in inventory among metros covered by the report. San Francisco and San Diego followed with 32% and 31% declines, respectively.
"We are in the midst of an inventory crisis that shows no signs of waning, impacting potential buyers all across the country," Zillow Chief Economist Svenja Gudell said. "Home values are growing at a historically fast pace, and those potential buyers want to get in the market while they still can. But with homes gaining so much value in just one year, buyers – especially first-time buyers – have to set aside more and more money for a down payment just to keep up with them. Unfortunately, there's just not enough homes for sale, and demand will continue to drive prices higher until we reach a better balance between supply and demand."
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Home values increased in October as supply continues to be limited and demand remains heavy, according to the Real Estate Market Report released by Zillow.