If you’re keeping up with the news, you may feel that the housing market is in a slump, and it’s only bound to get worse. Such a negative image painted by today’s headlines can be overwhelming. However, it’s essential to take a closer look at the data to understand the real picture. This blog will discuss the accuracy of current home price trends and explain why recent headlines might be misleading.
If you’re keeping up with the news today, you might feel a little uneasy about what’s happening with home prices and worry about whether the worst is yet to come. This is due to the overly pessimistic picture being painted by today’s headlines. Home prices did decrease when compared year over year, but that is only because we are comparing to a “unicorn” year when prices peaked significantly higher than average.
We must examine monthly data to prevent an unjust comparison to that earlier peak. And that tells a very different and much happier story. The national data tells us the following, even though market-specific local home price trends continue to vary.
The graphs below illustrate how prices are rising nationwide and the worst home price declines have already passed. They are based on recent monthly reports from three different sources.
If you’ve been keeping up with the news lately, you might be a little uncertain about what’s going on with home prices and worry that things could get worse before they get better. This is due to the overly negative portrayal in today’s headlines. Home prices did decrease when compared year over year, but that is only because we are comparing to a “unicorn” year when prices peaked significantly higher than average.
This monthly view reveals that the housing market’s previous year can be divided into two parts. Home prices increased quickly in the first half of 2022. The graphs above show that prices started to decline in July (shown in red). The trend began to stabilize by late August or early September. But these graphs also demonstrate that prices are rising once more when the most recent data for early 2023 are considered.
A positive sign for the housing market is the fact that all three reports indicate prices have been rising for three or more consecutive months. The month-over-month data shows that home prices are once again on the rise, signaling a national shift.
C. J. The following are some observations made about home price trends by Lazzara, Managing Director at S&P Dow Jones Indices:
“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.”
Because there aren’t enough homes available for the number of people who want to buy them, according to experts, is one of the reasons prices haven’t fallen as precipitously as some had predicted. The number of buyers outnumbers the number of houses that are on the market, even with today’s mortgage rates.
In order to keep prices from falling, First American‘s Chief Economist Mark Fleming explains how there must be more demand than supply:
“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.”
Since there is such high demand, Doug Duncan, Senior VP and Chief Economist at Fannie Mae, claims that home price growth is exceeding expectations:
“. . . 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 . . .”
This Will Affect You In The Following Way
- Buyers: If you’ve been putting off buying because you were concerned that the value of your home would decline, knowing that home prices have rebounded should dispense some relief. Additionally, it offers you the chance to acquire something that typically appreciates in value over time.
- Sellers: It might be a smart idea to work with a real estate agent to list your house if you’ve been putting off selling your home because you were worried about how changing home prices would affect its value. The most recent data suggests that things are moving in your favor, so you don’t need to wait any longer.
While the real state of the housing market might be clouded with negative headlines, the data paints a much more positive picture. By focusing on the monthly data and not comparing to the previous peak, we can see a national shift happening towards rising home prices. Therefore, it’s essential to look beyond misleading headlines and remember the importance of accurate data to understand the current state of the housing market.
