On the one hand, this 3% drop in single-family home prices marks the second largest post-WWII house price correction. On the other hand, this correction remains moderate compared to the 26% decline from peak to trough recorded between 2007 and 2012.
The reason national home prices have come down a bit comes down to the fact that housing affordability – or better, lack of affordability –reached levels not seen since the housing bubble. It will happen when mortgage rates rose from 3% to 6% just after US home prices rose 41% during the pandemic housing boom.
This streak of seven straight months of declining U.S. home prices comes after national home prices rose for 124 straight months, from the low of the housing crash in February 2012 to the peak of the Pandemic real estate boom in June 2022.
And even with this 3% national decline, property prices are still rising. In fact, in January, national house prices, as measured by the seasonally adjusted Case-Shiller, were up 37% since March 2020.
Where do we go from here? It’s hard to say. Companies like Zillow And CoreLogic believe that the house price correction will soon die out. Meanwhile, companies like Fannie Mae And Moody’s Analytics think we are heading for a decline of about 10% from peak to trough. (Through December, seasonally adjusted house prices fell 3% from the June 2022 peak, while ending 2022 up 3.8%).
Keep in mind that when an index like Case-Shiller says “US house prices”, it is referring to the national aggregate. Regionally, this story continues to vary.