The Worst Home Price Declines Are Behind Us

In case you're keeping up with current news, you might experience some uncertainty regarding the state of home prices and concerns about potential future downturns. This uncertainty is largely fueled by negative headlines that are painting an exaggeratedly bleak scenario. However, it's important to note that home prices are not experiencing a drastic decline as suggested. Recent data actually presents a different and considerably more positive narrative. While local housing markets may still exhibit variations in price trends, the national data provides us with the following insights.

When we consider the changes in home prices over the span of a year, they remain in positive territory, albeit with a slower rate of appreciation than observed during the height of the pandemic. To gain a more comprehensive understanding of the current market trends, it's necessary to examine the monthly data.

The monthly graphs below use recent reports from three sources to show that the worst home price declines are already behind us, and prices are on their way back up nationally.

The detailed monthly analysis reveals that the housing market over the past year can be characterized as two distinct halves. During the first half of 2022, home prices experienced a steady ascent, reaching their peak in June. However, starting from July, there was a noticeable decline in home prices (highlighted in red in the aforementioned graphs). By approximately August or September, the market began to stabilize. Examining the most recent data from early 2023, these graphs also indicate a recent resurgence in momentum, with prices starting to rise again. As we enter the busier spring season, there is a growing acceleration in the monthly fluctuations of home prices.

Although it's important to note that a trend cannot be established based on just one or two months, the significant point to highlight is that all three reports indicate a stabilization of prices, which is an encouraging indication for the housing market. The month-over-month data reflects a clear consensus, albeit in its early stages, that a national shift is currently occurring. Essentially, home prices are beginning to show an upward trend once again.

Andy Walden, Vice President of Enterprise Research at Black Knight, says this about home price trends: 

“Just five months ago, prices were declining on a seasonally adjusted month-over-month basis in 92% of all major U.S. markets. Fast forward to March, and the situation has done a literal 180, with prices now rising in 92% of markets from February.”

Selma Hepp, Chief Economist at CoreLogic, explains the limited supply of homes available for sale is contributing to this positive turn:

“ . . . prices in many large metros appeared to have turned the corner, with the U.S. recording a second month of consecutive monthly gains. . . . The monthly rebound in home prices underscores the lack of inventory in this housing cycle.” 

Here’s What This Means for You 

• Sellers: If you've been hesitant to sell your home due to concerns about the fluctuating nature of home prices and its potential impact on your home's value, now might be the opportune moment to take action and collaborate with a real estate agent to list your property. The latest data indicates a favorable shift, so you no longer need to postpone your plans and can confidently move forward to meet your needs.
• Buyers: If you've been delaying your decision to buy a property out of concern that its value might decrease, you can now find reassurance in the fact that the situation is improving. By purchasing now, you can seize the opportunity before home prices rise further, allowing you to acquire an asset that generally appreciates over time. This gives you the chance to make your move with confidence and own a property that is likely to increase in value over the long term.

Bottom Line

If you postponed your relocation plans due to concerns about declining home prices, the latest data indicates that the most significant declines have already occurred, and home prices are now rising nationally. To understand the nuances of the market in your area, it would be beneficial to collaborate with a local real estate professional who can provide expert insights and clarify any questions you may have regarding the current state of home prices.