Home Prices Are Rising Again
If you've been paying attention to the news lately, you might be wondering what's going on with housing prices and whether or not the worst is yet to come. This is because today's headlines paint an overly dismal picture. In a year-over-year comparison, home prices did fall slightly, but that's because we're comparing to a 'unicorn' year when prices rose far beyond the norm.
We need to look at monthly data to avoid making an unfair comparison to the preceding high. That, on the other hand, paints a totally different and far more positive story. While local home price trends differ by market, the national data tells us the following.
Looking at this monthly picture, we can observe that the housing market has been separated into two halves over the last year. Home prices were rapidly rising in the first half of 2022. However, beginning in July, prices began to fall (as seen in the graphs above in red). By August or September, the tendency had begun to level out. However, looking at the most current statistics for early 2023, these graphs reveal that prices are rising once more.
The fact that all three reports show that prices have been rising for three or more months in a row is a good indicator for the housing market. The month-over-month data indicates a national change is taking place: home prices are once again growing.
Craig J. Lazzara, Managing Director at S&P Dow Jones Indices, says this about home price trends:
“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument.”
Experts say that one of the reasons prices did not drop as predicted is because there aren't enough available properties to accommodate the number of individuals who wanted to buy them. Even with today's low mortgage rates, there are more buyers than available homes.
Mark Fleming, Chief Economist at First American, explains how more demand than supply keeps upward pressure on prices:
“History has shown that higher rates may take the steam out of rising prices, but it doesn’t cause them to collapse entirely. This is especially true in today’s housing market, where the demand for homes continues to outpace supply, keeping the pressure on house prices."
Doug Duncan, Senior VP and Chief Economist at Fannie Mae, states home price growth is exceeding expectations thanks to that high demand:
“. . . housing prices continue to show stronger growth than what was previously expected . . . Housing’s performance is a testimony to the strength of demographic-related demand . . .”
Here’s How This Affects You
- Buyers: If you've been holding off on buying because you were worried the value of your home would go down, knowing home prices have bounced back should bring you some relief. It also gives you the opportunity to own something that usually becomes more valuable as time goes on.
- Sellers: If you've been waiting to sell your house because you were concerned about how changing home prices would affect its value, it might be a good idea to team up with a real estate agent to list your house. You don't have to wait any longer because the latest data suggests things are turning in your favor.
If you postponed your move because you were concerned about falling home prices, the most recent data indicates that the worst is over and prices are now rising nationally. Let's connect so you're aware of what's happening with property prices in our region.