Home Prices Are Rebounding

If you've been paying attention to the news lately, you might be wondering what's going on with home prices and whether or not the worst is yet to come. This is because today's headlines paint an overly negative 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 peaked far above the norm.

We need to look at monthly data to avoid making an unfair comparison to the previous peak. That, on the other hand, tells a very different and much more positive story. While local home price trends vary by market, the national data tells us the following.

The graphs below use recent monthly reports from three sources to show that the worst home price declines are already in the past, and prices are rising across the country.

Looking at this monthly view, we can see that the housing market has been divided into two parts over the last year. Home prices were rapidly rising in the first half of 2022. However, beginning in July, prices began to fall (as shown in the graphs above in red). By August or September, the trend had begun to level off. However, looking at the most recent data for early 2023, these graphs show 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 sign for the housing market. The month-over-month data indicates a national shift is taking place: home prices are once again rising.

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 believe that one of the reasons prices did not crash as predicted is that there aren't enough available homes to accommodate the number of people who want to buy them. Even with today's low mortgage rates, there are more buyers than there are 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 putting off buying because you were afraid the value of your home would fall, knowing home prices have recovered should provide some relief. It also allows you to own something that will typically increase in value over time.

Sellers: If you've been putting off selling your home because you're worried about how rising home prices will affect its value, it might be a good idea to work with a real estate agent to list it. You don't have to wait any longer because the most recent data indicates that things are going in your favor.

In conclusion
If you put off moving because you were worried about home prices falling, the latest data shows that the worst is already over, and prices are rising across the country. Collaborate with a local real estate agent to stay up to date on home prices in your area.

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