An updated analysis of Zillow Home Value Index data by Fortune (see chart below) finds that just 23% of the nation’s 200 largest housing markets saw a month-over-month home price decline in March. That share has swiftly declined over the past few months.
At the height of the housing correction in September 2022, 79% of the nation’s 200 largest housing markets saw a month-over-month home price decline. In October, 76% of those major markets saw a home price decline. In November and December, it was down to 64% and 67%, respectively. Then in January (when 47% of markets declined) and February (when 38% of markets declined) the correction slowed dramatically.
To better understand what’s happening in the U.S. housing market, Fortune built seven charts using the latest seasonally adjusted Zillow Home Value Index data. The index measures home values in the 35th to 65th percentile range (i.e. it looks at the middle of the market).
Let’s take a look at the updated data.
As mortgage rates spiked last year, the U.S. housing market saw new- and existing-home sales fall sharply while many markets—particularly Western housing markets—slipped into price correction mode.
However, heading into 2023, that free-fall in transactions has stopped while price corrections are waning.
What happened? The average 30-year fixed mortgage rate came down a bit, from 7.37% in early November to 6.50% as of Friday, just as we entered the seasonal spring period when housing demand increases. Additionally, some house price decreases, coupled with inventory remaining tight, has helped to stabilize the housing market in many parts of the country. Cue fewer home price cuts.
Zoomed out, it’s clear that the U.S. housing market passed through some sort of price correction in the second half of 2022. However, it’s already fizzling out much faster than the previous correction, which saw U.S. home prices fall 26% on a seasonally adjusted basis (and -27% on an unadjusted basis) between the peak in 2007 and the bottom in 2012.
This time around, U.S. home prices as measured by the seasonally adjusted Case-Shiller National Home Price Index are down 3% since the June 2022 peak. Without seasonal adjustment, U.S. home prices are down 5.1% from their peak.
Unlike the 2008 era crash, this time around we neither have a glut of inventory (the number of U.S. homes for sale in March 2023 was 49.5% below March 2020 levels) nor a subprime crisis. That said, housing affordability (or lack thereof) in 2023 is similar, on paper, to the height of the housing bubble.
On a seasonally adjusted basis, only 23% of the nation’s largest regional housing markets posted a month-over-month home price decline in March. Almost all of those markets were in the West, Texas, or Florida—including a monthly 1.27% decline in San Jose.
Meanwhile, 76% of regional housing markets posted a month-over-month home price increase in March. That includes a 1.52% monthly jump in Scranton.
Simply put: Scranton is booming again, while San Jose is falling.
Through the first three months of 2023, the biggest home price drops were found in markets like Austin (down 3.1% since December), Boise (down another 2.8%), Las Vegas (down another 3%), Phoenix (down another 2.5%), and San Jose (down another 3.4%).
The biggest upticks through the first three months of 2023 occurred in places like Jackson, Tenn. (up 4.7% since December), Morristown, Tenn. (up 4.0%), and Scranton, Pa. (up 4.0%).
Among the nation’s 400 largest housing markets tracked by Zillow, 182 are still below their 2022 peak price. Of those down markets, home prices in 38 markets fell over 5% from their respective 2022 peaks. That includes places like Reno (down 7.8% from its peak), Phoenix (down 7.49%), and Austin (down 9.54%).
Every market shaded “blue” in the chart above either remains at their all-time high or just set a new all-time high for home prices. (Among the nation’s 400 largest housing markets tracked by Zillow, 218 are back to or just set an all-time high in March.)
Still, house prices remain up on a year-over-year basis in most housing markets. The few exceptions are mostly out West.
However, this year-over-year map will get redder over the coming months—even if prices don’t fall further. The reason being: As hot months like March 2022 and April 2022 fall out of the 12-month window, more markets will go negative on a year-over-year basis. In fact, many housing analysts expect national home prices will be negative on a year-over-year basis once Case-Shiller publishes its April 2023 reading.
While home prices have fallen a bit in markets like Austin and Raleigh, home prices are still up substantially since the onset of the pandemic.
Between March 2020 and June 2022, the Pandemic Housing Boom saw U.S. home prices as measured by the seasonally adjusted Case-Shiller National Home Price Index skyrocket 41.1%. Since then, national home prices have deflated 3%. That reduces remaining Pandemic Housing Boom gains to 36.9%.
Even the markets experiencing sharp declines are still up big-time: Austin is up 43.4% since March 2020, while home prices in Raleigh are still up 44.4%.
Want to stay updated on the housing market? Follow me on Twitter at @NewsLambert.
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The housing market in the United States has been a topic of great debate in recent years. New data released recently highlights an interesting contrast between two of the nation’s largest housing markets, Scranton and San Jose. According to the data, home prices in the 400 largest markets across the country rose 3.2 percent in the fourth quarter of 2018. Home prices in Scranton, Pennsylvania, were among the highest gainers, posting a 14.3 percent increase during that same period. This marks a significant turnaround for the city, which had previously been one of the bottom five markets for housing price appreciation for the previous seven years.
On the other hand, San Jose, California experienced one of the largest drops in home prices with a decrease of 6 percent in the fourth quarter of 2018. This highly sought-after market has experienced declining home prices for three straight quarters and is currently listed as one of the weakest markets in the United States.
The data reflects a larger trend among the housing markets across the country, with many smaller markets seeing more sustained gains in home prices than larger markets. The divergence of Scranton and San Jose appears to be linked to the sluggish economic data coming out of California, which has caused homebuyers to look to more affordable markets such as Scranton.
This data suggests that while the US economy remains strong, a continued divergence in home price trends is likely to emerge among the nation’s largest housing markets. While it’s not clear how long the trends in the Scranton and San Jose markets will continue, one thing is for certain — real-estate markets across the country remain unpredictable and are likely to continue to surprise us in the coming months.