If you’re a bit confused about what’s going on with home prices, it’s okay. Some folks are saying prices are going down, but the facts say otherwise. Some of the confusion comes from unreliable sources of information. Also, some news stories are not showing the data correctly. To make it easy, here’s the real deal with reliable data you can believe in.
Normal Home Price Seasonality Explained
In the housing market, there are regular patterns that happen every year, and we call it seasonality. Spring is when most people buy homes, and it’s the busiest time for the market. The summer is still pretty active, but as the weather cools down, the market activity tends to slow down too.
Home prices follow this pattern because when many people want something, like a house, its price goes up. This creates a consistent trend in home prices over the long term. The graph below, using data from Case-Shiller from 1973 to 2022 (not adjusted for seasonal changes), shows the typical percent change in monthly home prices, so you can see how they follow this seasonal pattern:
The data indicates that at the start of the year, home prices increase, but the growth isn’t as significant as it is when we enter the spring and summer months. This is because the housing market is quieter in January and February since fewer people tend to move during the colder months. When the market shifts into the peak homebuying season in spring, there’s more activity, causing home prices to rise more noticeably. As we head into fall and winter, prices still go up, but the pace of growth slows down again as the housing market becomes less active.
This Year, Seasonality Has Returned
Now, let’s look at how this year compares to that long-term trend (see graph below):
Here’s the latest data for this year from the same source. Similar to before, the dark bars show the usual trend, while the green bars represent what’s happened this year. You’ll notice that the green bars are starting to align with the normal market trend. This is positive because it indicates more sustainable price growth compared to recent years.
In simple terms, prices aren’t dropping nationally; it’s just that the rate of price growth is getting back to a more regular pace. In the future, there’s a chance the media might present this slower growth as falling prices. So, it’s essential not to believe everything you read in the headlines. The data provided here gives you the context to truly understand the situation. If you find something confusing in the news, reach out to a reliable real estate professional for more information.
Remember, it’s typical for home price growth to ease off as the year progresses. This doesn’t mean prices are going down; they’re just increasing at a more moderate speed.
Bottom Line
Home price appreciation is getting back to its usual seasonal patterns, which is positive. If you have any questions about how prices are behaving in our local area, feel free to reach out. Let’s connect!
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Sat, 02 Dec 2023 00:23:31 +0000
by Mottek Group