Zillow Home Value Index: "Real" Home Value Flat in May

In May, nominal home values increased for a 14th straight months while "real" home values were flat. Last month's ZHVI came in at $360.681, up 0.4% from the previous month and up 4.3% from one year ago. However, after adjusting for inflation, the real figures are 0.0% month-over-month and -1.3% year-over-year.

Zillow.com, the real estate listing and brokerage website, makes a wealth of real estate data publicly available. Of these, the Zillow Home Value Index (ZHVI) attempts to provide a seasonally adjusted measure of home values as well as market changes. Specifically, its “flagship” ZHVI uses data for “all homes, middle tier, smoothed and seasonally adjusted cut”. It is supposed to represent the middle of the market for all homes - the “typical home value” - and not the median home value. The index debuted in 2006.

The Zillow Home Value Index (ZHVI) now incorporates the more accurate neural Zestimate.

Starting with Zillow’s January 2023 data release, and for all subsequent releases, the full ZHVI time series has been upgraded to harness the power of the neural Zestimate, which is the Zestimate displayed on home detail pages nationwide. The neural Zestimate employs a neural network that leverages a deeper history of property data — such as sales transactions, tax assessments and public records, in addition to home details such as square footage and location — to react more quickly to current market trends.

Importantly, the way the Zillow Home Value Index is calculated has not changed, just the Zestimates used to construct it. Because the Zestimates that make up ZHVI are now more accurate, the new ZHVI will better reflect market changes at the national and local levels.

Within the ZHVI, there are a number of “cuts” to look at - for instance by geographical region or housing type. Here, we will focus on the flagship ZHVI, the typical home values.