Steady Growth Persists in Home Prices – Following a Sustained Yet Controlled Trend

Home Prices Still Growing – Just at a More Normal Pace

If you find yourself confused about the current state of home prices, you're not alone. Despite evidence to the contrary, some individuals continue to claim that prices are declining. This misunderstanding is fueled by unreliable sources and media coverage that often misrepresents the actual data. To provide clarity, here's a straightforward overview based on trustworthy real data.

Normal Home Price Seasonality Explained

Within the housing market, there are recurring patterns known as seasonality, reflecting predictable fluctuations each year. Spring emerges as the peak homebuying season, characterized by heightened market activity. Although the summer maintains robust activity, it gradually diminishes as the cooler months approach.

This seasonality also influences home prices, as they tend to appreciate when demand is at its peak. Consequently, a consistent long-term trend in home price movement can be observed. The graph below utilizes data from Case-Shiller to illustrate the typical percentage change in monthly home prices from 1973 through 2022.(not adjusted, so you can see the seasonality):

 

Analyzing the data reveals that at the start of the year, there is growth in home prices, albeit not as pronounced as during the spring and summer markets. The subdued activity in January and February, owing to fewer relocations in the colder months, contributes to this trend. Transitioning into the peak homebuying season in spring, market activity intensifies, resulting in a more substantial increase in home prices. Subsequently, as fall and winter approach, prices continue to rise, albeit at a more moderate pace, reflecting a decrease in activity once again.

This Year, Seasonality Has Returned

Now, let’s look at how this year compares to that long-term trend (see graph below):

 

The most recent data for this year, sourced similarly, maintains the use of dark bars to depict the established trend and introduces green bars to represent this year's developments. Notably, the green bars are aligning more closely with the traditional market pattern. This alignment is positive, indicating a more sustainable trajectory for price growth compared to recent years.

In essence, it's crucial to clarify that national prices are not experiencing a decline; rather, price growth is entering a phase of normalization. Going forward, there's a likelihood that media coverage may misinterpret this deceleration in home price growth as an outright fall in prices. It is advisable not to fully rely on headlines and, instead, seek additional insights from a trusted real estate professional to gain a more comprehensive understanding of the situation.

Remember, it’s normal to see home price growth slow down as the year goes on. And that definitely doesn’t mean home prices are falling. They’re just rising at a more moderate pace.

Bottom Line

Home price appreciation is returning to normal seasonal patterns, signifying a positive development. For insights into the specific dynamics of home prices in your local area, it's recommended to reach out to a knowledgeable real estate professional.

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