Home Prices
Home prices Appreciate when home prices increase.
Home prices Depreciate when home prices decrease.
Home prices Decelerate when home prices continue to appreciate, but at a more moderate pace.
Now the Talk
We’re seeing deceleration today, meaning home prices are fighting to appreciate.
In 2021, data from CoreLogic tells us home prices appreciated 15%. Earlier this year, that appreciation was upward of 20%. This year home prices are appreciating at this decelerated pace of around 10 to 11%, on .
The graph below uses the latest data from CoreLogic to help tell the story of how home prices are decelerating, but not depreciating so far this year.
Looking at the green bars, home prices appreciated between 19-20% year-over-year from January to March. Over the last few months, the pace of that appreciation has decelerated to 18%. This means price growth is still climbing.
As the Monthly Mortgage Monitor from Black Knight explains:
“Annual home price growth dropped by nearly two percentage points . . . – the greatest single-month slowdown on record since at least the early 1970s. . . While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”
Home prices are still above the norm.
Housing activity could be more robust than you think
Housing has three direct linkages to economic activity (GDP): the construction of new homes, the remodeling of existing homes, and that of housing transactions. Though all three will decelerate and thus be a headwind to the cycle, remodeling and new builds have a strong fundamental backdrop and may turn out more robust than expected.
And while history doesn’t always repeat itself, we can learn from it. While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing.
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Truth
You are a concerned homebuyer or homeseller and you need to know what is happening in your housing market so you can make the most informed decisions possible.