Nearly 40% of Housing Markets Nationwide Have Returned to Their Peak Prices

If you’ve heard that the housing market crashed, consider this.

Nearly 40% of markets nationwide have returned to peak home prices on a seasonally
adjusted basis, per a new report from Black Knight.

These markets are primarily located in the Midwest and Northeast, along with Southern Florida.

And another six markets are within 1% of last year’s peak, meaning about half the country is still around all-time highs.

Of course, there are some markets on the opposite end of the spectrum as well.

The Housing Market Hasn’t Crashed Yet

While the housing bears are licking their chops at any tidbit of potential bad news, the data continues to tell a different story.

Black Knight’s latest Mortgage Monitor revealed that home prices rose during the month of March on both a non-adjusted and seasonally adjusted basis.

Property values increased a seasonally adjusted 0.45% in March (+1.38% non-adjusted), marking the third consecutive month of increases.

And 92% of housing markets nationwide saw prices increase during the month.

However, prices increased just 1.0% on a year-over-year basis, as the rate of appreciation (which was clearly unsustainable) continues to slow.

This rate of appreciation has been falling by about 1.3-1.4% each month since the start of 2023, per Black Knight.

A few months ago, home prices were falling month-to-month on a seasonally adjusted in 92% of U.S. metros.

In March, home prices were climbing in 92% of markets from a month earlier, a veritable 180.

But the company expects the annual growth rate in home prices to hit “roughly 0% by April.”

Low Supply Is Driving Home Prices Higher and Limiting the Downside

housing inventory

The housing market narrative continues to be one driven by inventory, or a lack thereof. The bears argue that home prices are unaffordable.

And while they’re not necessarily wrong, the lack of supply has allowed home prices to remain at lofty levels and even eek out some monthly gains.

This same lack of supply is limiting downside movement, with the supply of active for-sale listings falling for the sixth straight month.

It’s now at its lowest level since April of last year, driven by 30% fewer new listings hitting the market in March compared to pre-pandemic norms.

That puts current available inventory at mere 2.6 months of supply on a seasonally adjusted basis, which Black Knight says tips “the scale back toward sellers.”

So the buyer’s market we saw in 2022 might have already come and gone, though it could return if mortgage rates remain elevated and supply increases as the year goes on.

Where Home Prices Remain at Their Peak

prices vs peak

First, at the national level, home prices are just 1.7% off their June 2022 peak (seasonally adjusted).

That’s an improvement from the -2.6% decline seen back in December.

But amazingly, about 40% of the nation’s housing markets are at their peak levels, this in spite of mortgage rates near 7%.

And Birmingham, Detroit, Houston, Orlando, New York, and the District of Columbia are all within 1% of their all-time highs.

Even more impressive, some metros are still chalking near-double-digit home price increases annually.

Take Miami, where home prices are up 9.5% from a year earlier, or Hartford, CT (+7.7%), Kansas City, MO (+5.5%), Cincinnati, OH (+5.2%), and Virginia Beach, VA (+5.0%).

Pretty incredible to see these types of year-over-year gains given the fact that the 30-year fixed climbed from ~3% to around 6.5% today.

Where Home Prices Are Falling the Most

largest declines

Of course, it’s not all good news. And real estate is always going to be local. On the other end of things, home prices are off 11.6% in San Jose compared to a year ago.

Similar declines can be seen in Austin, TX (-11.2%), San Francisco, CA (-11.1%), and Seattle, WA (-10.8%).

Property values have also been hit in once-hot metros like Sacramento, Phoenix, Las Vegas, Salt Lake City, San Diego, and Los Angeles.

The city of Austin, Texas has had it the worst, with home prices now down 15.5% from their 2022 peak.

This might explain the negative sentiment from housing bears in that region of the country.

Double-digit declines can also be seen in San Jose, San Francisco, Seattle, Phoenix, and Las Vegas.

But given how much home prices increased in these metros, especially in such a short period of time, it’s not a major surprise.

For this same reason, the shift in prices feels more like a correction than a crash given the massive gains prior to the fall.

To sum things up, real estate is local. Some markets are still thriving, others are correcting.

And the housing market is weathering the mortgage rate storm thanks to continued lack of supply.

If and when that changes, the narrative might change as well.

Comments are closed.