U.S. home values rose just 1.1% over the past year, according to Zillow’s July Market Report, the kind of near-flat reading that shows how thoroughly mortgage rates near 7% have cooled what had been one of the hottest housing markets on record. Inventory kept building for a 32nd straight month, giving buyers more choices and less urgency at the same time sellers are becoming more willing to cut asking prices. The combination points to a market where would-be buyers are increasingly willing to wait rather than stretch for a home at today’s borrowing costs.
What “Flat” Looks Like Inside Zillow’s Price Index
The Zillow Home Value Index put the typical U.S. home at $371,757 in July, up just 0.4% from June and 1.1% from a year earlier. A year-over-year gain that small is a sharp deceleration for a market that, in recent cycles, has posted annual appreciation several times that pace, and it reflects buyers who are increasingly unwilling or unable to stretch their budgets at current borrowing costs.
That flattening has created a narrow affordability opening: a monthly mortgage payment on the typical U.S. home, assuming a 20% down payment, ran about $1,888 in July, 0.9% below what the same purchase would have cost a year earlier, the same report found. That edge may not last, since average mortgage rates have moved toward 7% since midsummer and would need to reverse course for the year-over-year advantage to hold into the fall.
Slower price growth is not evenly distributed across the country. Markets that saw the steepest run-ups earlier in the decade are generally the ones now posting flat or slightly negative year-over-year changes, while metro areas that never appreciated as sharply are still recording modest gains, a pattern consistent with a market cooling from the top down rather than collapsing broadly.
Austin’s typical home value fell 4.5% over the year, the steepest decline among the major metro areas in Zillow’s July report, and Dallas fell 2.2% while Denver slipped 1.7%. Those are the same Sun Belt markets that saw some of the sharpest run-ups earlier in the decade. Meanwhile, Chicago and Milwaukee still posted year-over-year gains above 4%, showing that the national 1.1% figure blends genuinely falling prices in some metros with genuinely rising prices in others rather than describing a uniformly flat market.
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Inventory Keeps Building In A 32-Month Streak
Roughly 1.41 million homes sat for sale nationwide in July, 1.5% more than a year earlier and 0.9% above June, extending a stretch of rising inventory that has now run for 32 consecutive months. New listings totaled 387,203 for the month, up 3.1% from a year earlier, showing that sellers keep bringing homes to market even as buyer demand has softened under the weight of higher borrowing costs.
Sellers are responding to the slower pace with more price cuts: 27.1% of July listings had at least one reduction, up from 25.7% in June, even though that share was slightly lower than the 27.4% recorded a year earlier. Homes also took longer to find a buyer, with a median of 25 days to go pending in July, one day longer than a year ago and five days longer than June, a sign that the market’s cooling accelerated over the summer rather than easing off.
Inventory gains are not spread evenly either. Seattle’s supply of homes for sale jumped 17.2% year over year and Washington, D.C.’s rose 10.8%, handing buyers in those metros far more room to negotiate than the national figures suggest. Miami and San Francisco moved in the opposite direction, with inventory down 14.9% and 15.8% respectively, a reminder that some of the country’s most expensive markets are still tight even as the national trend points toward buyers gaining leverage.
Why Buyers Are Waiting Out Rates Near 7%
The rate keeping many buyers on the sidelines is well documented. Freddie Mac’s Primary Mortgage Market Survey put the 30-year fixed average at 6.95% for the week of September 17, up from 6.26% the same week a year earlier, and Zillow has tied the slower summer sales pace directly to rates holding above 6.5% for much of the season. When financing costs run that high, a buyer who does not need to move immediately often chooses to wait rather than lock in a payment that could look expensive if rates ease later.
Competition for the homes that do sell has eased only slightly so far: 30.8% of homes sold above their list price in June, the most recent month with final data, compared with 30.9% a year earlier. That is a much smaller shift than the changes in inventory and price cuts, suggesting that well-priced homes in desirable locations are still drawing multiple offers even as the broader market cools around them.
The Federal Reserve Bank of St. Louis maintains the same 30-year mortgage rate series that Freddie Mac publishes, so any household weighing whether to wait for a lower rate before buying can track the trend directly rather than relying on a single week’s snapshot.
Flat Home Prices Don’t Flatten The Property-Tax Bill
Home values have leveled off and inventory keeps building, but a slower market does not automatically lower the property tax an existing homeowner already owes, since assessments often lag behind or simply ignore price softening. Someone who has owned for years and watched their home’s paper value plateau can still be facing an assessment written for a hotter market.
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This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
