Updated analysis of Zillow Home Value Index data by fortune (see chart below), found that 38% of the nation’s 200 largest housing markets experienced a decline in home prices in February. Its share has been steadily declining over the past few months.
At the height of the housing correction, 79% of the nation’s 200 largest housing markets saw home price declines in September. In October, 76% of these major markets experienced a decline in home prices. In November and December, it dropped to 64% and 67%, respectively. And in January, only 47% of the nation’s 200 largest housing markets registered a monthly decline in home prices.
What is this to us? Yes, the house price correction is gone – at least geographically.
To better understand what is happening in the US housing market, fortune constructed seven charts using the latest seasonally adjusted Zillow Home Value Index data. The index measures home values in the 35th to 65th percentile range (that is, it appears to be in the middle of the market).
Let’s see the updated data.
The US housing market saw sales of new and existing homes drop sharply in the second half of 2022 as the market adjusted for mortgage rates last year.
However, this year, activity has come to a sudden halt as the 30-year fixed mortgage rate has fallen slightly, from 7.37% in early November to 6.57% on Monday, and as we enter the seasonal spring when demand increase. On the new home side, aggressive price cuts by builders coupled with incentives, such as lower mortgage rates, are helping builders increase sales.
The result? The house price correction is gone. In September, home prices in 79% of the main market declined, compared to 38% in February. But that doesn’t mean national house prices have returned to growth mode. Indeed, nationally, home prices as measured by Zillow fell 0.02% in February.
Since peaking in June, US home prices as measured by the seasonally adjusted Case-Shiller National Home Price Index fell 2.7% through December. Without seasonal adjustments, US home prices fell 4.4% from their peak.
On the one hand, the correction that took place was the first nationally since the housing crash fell in 2012. On the other hand, the 2.7% decrease is mild compared to the 26% decrease that occurred between the peak of the market in 2006 and the bottom in 2012.
Unlike the 2008 crash, this time we don’t have a glut (active listings in February 2023 were 37.6% below February 2020 levels) or a subprime crisis.
Ultimately, analysts at companies like Fannie Mae and Moody’s Analytics expect a peak decline of up to 10%. While economists at Zillow and CoreLogic think national prices could fall this spring. That said, economists at all of these companies acknowledge that peak declines will vary by market.
While the correction has lost steam, it is still very much alive.
During the first two months of 2023, the largest home prices were found in markets like Austin (down 2.5% since December), Boise (down another 2.4%), Las Vegas (down another 2.4%), Phoenix (down another 2.2% ), and San Jose (down another 2.1%).
“We still think there’s more [home] The price correction comes on the resale side, though. And the resale market is always stickier to the downside when it comes [home] prices,” Rick Palacios Jr., head of research at John Burns Real Estate Consulting, said in a video posted in February.
While many Western and Southern housing markets continue to decline, many Midwestern and Northeastern markets continue to rise. That includes places like Chicago (up 0.6% from December) and Scranton, Pa. (up 2.4% from December). Unlike its peers in the West and Southeast, home prices in these markets have not lost ground on local income levels during the Housing Boom Pandemic.
Among the nation’s 400 largest housing markets tracked by Zillow, local home prices are down in 232 from their 2022 peak. Of the declining markets, home prices in 39 are down more than 5.00% from their 2022 peak. .9% from its peak), Austin (down 8.9%), and Phoenix (down 7.1%).
Still, prices are still rising on a year-over-year basis in most housing markets. Some exceptions are places like Boise, where prices fell 5.2% between February 2022 and February 2023.
This will change over the next few months. As hot months like February 2022 and March 2022 recede, more markets will be negative each year. In fact, many housing analysts expect it national home prices will be negative on a year-over-year basis by April.
He said, house prices are still rising a lot since the beginning of the pandemic.
During the Housing Boom Pandemic, from March 2020 to June 2022, US home prices as measured by the seasonally adjusted Case-Shiller National Home Price Index rose 41.2%. Since then, national house prices have fallen by 2.7%. That reduced the benefits of the Pandemic Housing Boom to 37.4%.
Even markets that have experienced steep declines still have a lot going for them.
Look at Austin, where February home prices fell 8.9% from their 2022 peak, still 44.4% above March 2020 prices.
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