Annual U.S. home value growth has slowed in each month since April 2018 – The typical home in the U.S. is worth $245,193, up 3.8% from a year ago. – There were 1,500,262 homes listed for sale in January, down 8% from a year ago. – Typical U.S. rent grew 2.3% to $1,602.

Annual U.S. home value growth slowed for the 21st consecutive month in January, but you have to squint to spot the difference this time around. When paired with inventory that is hovering near record lows, the nearly two-year slowdown in the housing market may be coming to an end right as home shopping season kicks off.

U.S. home values grew 3.8% year-over-year to $245,193, less than one-hundredth of a percentage point slower than the previous month, according to the January Zillow® Real Estate Market Report. Annual home value appreciation has slowed in each month since April 2018, but this is the smallest drop from one month to the next during that period. 

And while the number of homes listed for sale increased from record lows a month earlier, inventory is down 8% annually — the biggest annual drop since March 2018. There were 1,500,262 homes on the market in January, up 4,295 from the previous month but down 130,310 year-over-year.

This persistently low inventory is a key reason why home value growth is expected to speed up once again. The economy has remained strong, mortgage rates are low and buyers will be competing for a limited number of homes this home shopping season. 

Rent growth remained stable. The typical rent is now $1,602, up 2.3% year over year and just $1 more than last month. Rents are growing faster than a year ago in 28 of the 35 largest U.S. metros, led by Phoenix (+7.9% annually) — also the fastest-growing for-sale market — Pittsburgh (+7%), Cincinnati (+5.7%) and Las Vegas (+5.7%). 

Mortgage rates listed by third-party lenders on Zillow rose to a peak of 3.77% on January 31 after starting the month at 3.70%. Rates reached their monthly low on January 24 at 3.51%. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site by third-party lenders and reflect recent changes in the market.