U.S. Home Values Continued Fall in October; Rate of Decline Stabilizes

We pulled this article from the Zillow Research blog.

The Zillow Real Estate Market Reports, released today, show home values dipped 0.3 percent from September levels (Figure 1) to $147,900 (Figure 2), representing a 5.1 percent decline on a year-over-year basis. The rate of monthly depreciation has stabilized around -0.2 percent to -0.3 percent over the last few months, an improvement compared to the fall of last year, when rates reached more than 0.8 percent monthly depreciation.

Continued home value depreciation is a reflection of an abundance of housing supply relative to continued anemic demand despite record high housing affordability and historically low mortgage rates. Low consumer confidence and fears of further price declines continue to contribute to a crisis of confidence among potential buyers. We are encouraged by the positive, albeit slow, progress in working down unemployment, as reflected both in the general unemployment measure (U-3) and the U-6 measure which we think is a better predictor of household formation rates (Figure 3). The U-6 unemployment measure considers the unemployed seeking full-time employment plus marginally attached workers and those working part-time for economic reasons.