Home prices drop in 95% of U.S. metros since last spring’s peak
”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: Home prices have fallen in all but 11 of 221 U.S. metropolitan areas since last spring’s peak.
Source: My trusty spreadsheet reviewed the National Association of Realtors’ quarterly report on 221 housing markets, which tracks the median selling price for existing, single-family homes.
A dash of good news for house hunters is that prices fell in 95% of the metros when comparing the first three months of 2023 vs. last year’s spring quarter. And 27% of those drops were double-digit declines.
That’s not a terribly surprising result after the Federal Reserve last year essentially doubled mortgage rates in an attempt to cool the overall economy and the highest-in-four-decades inflation rate.
The biggest nine-month price drops were in Austin (off 24%), San Francisco and Champaign, Illinois, (off 23%), Kankakee, Illinois, (off 22%) and Provo, Utah (off 18%).
Best performances? Elmira, N.Y. (up 7.9%), Owensboro, Kentucky (up 4.6%), Decatur, Alabama (up 3.6%), Hickory, North Carolina (up 3.4%), and Warner Robins, Georgia (up 3%).
Nationally, prices were down 10% in the nine months. By region, Western states’ prices were down 13%, the Midwest fell 11%, the Northeast was off 10%, and the South dropped 8%.
How did we get here?
Price dips have been a consistent storyline since the middle of 2022. Low affordability tied to those lofty mortgage rates dampened enthusiasm for homebuying. Economic unease unnerved house hunters. And workers going back to offices and children returning to classrooms cut the need for larger living spaces.
The price reversal first showed up in last year’s third quarter, with three-month price dips in 69% of the 221 metros. The overall U.S. price benchmark off 3.5%.
In the fourth quarter, three-month losses grew to 91% of the metros with the national median dipping 4.9%.
And the downtrend continued through this year’s first three months, with losses found in 69% of the metros.
Nationwide, prices were down 1.9% in 2023’s first three months. Regionally speaking, the West was down 4.4%, the Northeast was off 4.1%, the Midwest dipped 2.2%, and the South fell 0.9%.
Recent price weaknesses are a hefty turnabout from previous pandemic era gains. Those increases were largely tied to the Fed’s previous thinking – using aggressive rate cuts to help mitigate the economic chill created by the coronavirus.
Remember that by this Realtor math, U.S. prices rose 31% between 2022 and 2020 – with substantial regional gains in the West of 37%, South (36%), Northeast (25%) and Midwest (20%). And all 221 metros saw prices rise in these two years.
The traditional spring homebuying season is here, and there’s plenty of buzz that prices are firming. Is that sustainable with meandering mortgage rates and choppy overall economics?
Well, go back to spring 2022 to see a powerful seasonal surge – U.S. prices were up 10.9%, with the West up 9.4%, the Midwest jumping 15.9%, the Northeast rising 11.2%, and the South increasing 10.2%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at email@example.com