Housing inventory has reached another record low, dropping 40.5% in the past two years, according to Zillow’s December Monthly Report. That drop in inventory is hampering buyers as the spring home shopping season gets underway earlier than usual. 

But while inventory continues to drop, that limited supply is increasing price growth, as the pace of home-value appreciation rose for the first time since July. 

Zillow’s report found that while the current market favors sellers, the uncertainty around the rise in COVID cases is creating hesitancy among buyers to join the market and could be discouraging would-be home sellers to list their properties. 

Jeff Tucker, senior economist at Zillow, said home shoppers picked the shelves clean last month, leaving fewer active listings than ever before. 

“Enough determined buyers kept up their house hunt to reignite monthly price appreciation,” he said in a press release. “Rising mortgage rates could be the next potential headwind, but demand has proven persistent; neither high prices nor slim inventories have deterred buyers so far.”

Nationally, the report found December home values were 19.6% higher than a year before; the pace of growth reached an all-time high in more than two decades worth of data. Monthly growth, which had been slowing since July, accelerated to 1.4% in December from 1.2% in November. 

Last month, Houston home values rose 19.3% from the prior-year period to $278,685, an increase of 1.2% from November.

Rent growth slowed in December, according to the report, which recorded the lowest monthly growth since February 2020. Despite the slowdown, typical rents rose a record 15.7% year over year and posted gains in all 50 of the country’s largest metros. 

Houston rents grew to $1,519 in December, up 11.9% from 2020.