Are The Latest Home Price Headlines Confusing You?

Are The Latest Home Price Headlines Confusing You?

Based on the most recent headlines in the media regarding home prices, you may be worried they are on a downward trend. But here is something to consider. The headlines are not providing you with the full picture of the housing market..

If you look at the national data for 2023, home prices actually showed positive growth for the year. While this varies by location across the U.S., and while there were some months with slight declines nationally, those were the exception, not the rule.  This can be especially true during the year when buyers and sellers are navigating real estate decision-making around academic calendars, family vacations, and the holiday season. 

The truth of the matter is…..home prices went up last year, not down. 

Home Price Growth Was More Normal in 2023

According to most analysts and market experts last year was more normal for home appreciation overall. To prove it, here is what usually happens in residential real estate.

In the housing market, there are predictable ups and downs that take place each year. It’s called seasonality. It looks like this for the most part. Spring is the peak homebuying season when the market is most active. That activity is usually still strong in the summer, but begins to wind down for various reasons toward the end of the year. Home prices seem to follow along with this trend because prices usually increase the most when there is higher demand.

The graph below uses data from Case-Shiller to show how this pattern played out in home prices from 1973 through 2022 (not adjusted, so you can see the seasonality):

Home Price Trends in the past 49 Years

As you can see from the data, for the past 49 years, home prices have matched typical market seasonality. At the beginning of the year, home prices will increase more moderately. The reason for this is the market is less active as fewer people move in January and February. Especially in colder climates when the weather makes an impact on decision-making for buyers and sellers.  Then, as the market transitions into the peak homebuying season in the spring, activity is on an upward trajectory. Ultimately, home prices will follow. As fall and winter approach, activity eases again and prices grow at a much slower rate.

The graph below has the data layered for most of 2023 (shown in green) on top of the long-term trend (still shown in blue).  That way, it is easy to understand how 2023 compares.

Home Price Trends Previous Years Versus 2023

As the graph shows, during the course of 2023 the level of appreciation fell more in line with the long-term trend for what usually happens in the housing market. You will notice how close the green bars come to matching the blue bars in the later part of the year.  

However, media and major headlines seem to really focus on the two bars outlined in red. Here is the context you may not have gotten that can really put those two bars into perspective. The long-term trend shows it is normal for home prices to moderate in the fall and winter seasons, which is typical seasonality.

Furthermore, since the 49-year average is so close to zero during those months (0.10%), that also means it is not that unusual for home prices to drop slightly during those times. Overall, these are relatively insignificant points in time to make a general conclusion regarding 2023. If you look at the year as a whole, home prices still rose.

What Is Important To Keep In Mind?

Headlines are going to call attention to the small month-to-month dips instead of the bigger year-long picture, which is misleading because it only focuses on one part of the whole story. Last year, we saw the return of seasonality in the housing market after home prices skyrocketed unsustainably during the pandemic.

If you are still worried that home prices will fall, do not be alarmed.  The expectation for this year is that prices will continue to increase as buyers re-enter the market due to mortgage rates trending down. As buyer demand goes up and more people move at the same time, it will continue to put pressure on home prices.

The Bottom Line

Do not let home price headlines confuse you. The data shows that home prices rose in 2023. If you have questions about what you are hearing in the news or about what is happening with home prices in our area, connect with S.H. June and Associates, and speak with one of our knowledgeable agents.



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