Zillow’s latest market report indicates home values dropped for the second straight month as mortgage rates continue challenging affordability.

The typical home value fell 0.3% from July, the largest monthly decrease since 2011.

Low-cost markets are still competitive. Prices are dropping faster in both the most expensive markets and the pandemic boom markets.

Competition for homes is strongest in affordable metros and weakening fastest in expensive ones.

Lack of competition among buyers has raised both inventory and listings’ time on the market.

“Substantial day-to-day and week-to-week rate movements mean that many potential buyers are able to qualify for a loan one week, but not the next, or vice versa,” said Skylar Olsen, chief economist at Zillow. “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.”

The typical home value is now at $356,054, as measured by the raw Zillow Home Value Index. That’s down .3%, the largest monthly decline since 2011. It follows a 0.1% decrease in July.

Appreciation has receded since peaking in April. But, typical home values are still up 14.1% from a year ago and 43.8% since August 2019, according to Zillow.

The typical time before a listing goes pending is now 16 days. This is three days more than in July and up from an “all-time low” of six days in April.

Inventory was up 1% from July, the smallest monthly increase since February, the data showed.

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