Due to record unaffordability, home prices in the 20 largest U.S. metropolitan areas dropped for the first time in more than two years, and they may continue to decline in the months to come.
In March, the S&P CoreLogic Case-Shiller 20-city home-price index had its first monthly dip since January 2023, down 0.12% from the previous month. Seasonality was applied to the data.
Data on repeat sales is measured by the Case-Shiller index. It typically shows a three-month moving average and has a two-month lag.
Annually, home prices continue to rise. The 20-city index has increased 4.1% from the same month last year. Home prices increased 4.5% year over year the prior month, so even that number is a step down.
However, the housing market is generally slowing down.
Over the past few months, home price growth has slowed. Due to ongoing unaffordability, the pandemic’s exponential rate of home price growth has halted, and in cities like Tampa, Florida, where housing supply has outpaced demand, home prices have been declining for the past few months.
There were also indications of a slowdown in the national index, which is a more comprehensive indicator of property prices. Home prices nationwide increased 3.4% in March compared to the same month the year before, which was less than the 4% increase the month before.
In March, a single-family home for sale had a median price of $407,300. It was $403,700 for a newly constructed single-family home and $363,000 for a condo or co-op.
Where a decline in housing prices is anticipated
Over the next months, the property market is probably going to lose additional momentum as purchasers are pushed to wait by economic uncertainty.
Due to a marked decline in demand, house sellers are lowering their prices in an effort to attract buyers. Home sales are being impacted by the fear experienced by both buyers and sellers: According to the National Association of Realtors, the pace of existing-home sales in April was the slowest since 2009.
Read more: In a changing property market, buyers are winning. “Everyone is looking for a deal.”
Jake Krimmel, a senior economist at Realtor.com, told MarketWatch that “a number of demand-side factors, including economic uncertainty, continued higher interest rates, and declining consumer sentiment, are causing the market to be softer than usual this spring.”
“Nowhere is the softening clearer than the growing inventory of homes for sale, which rose over 30% [year over year] in April,” he stated.
Expect price drops in metropolitan regions where there are a lot of listings for homes that have been on the market for weeks without selling, he noted.
According to Krimmel, “these are markets where we can expect lower or potentially negative price growth in the coming months.” The South and West are seeing the biggest growth in inventories and the amount of time listings are on the market, with 33% and 42%, respectively.
Almost one out of five sellers are lowering the pricing on their listings, which is the largest percentage for that month since the firm started keeping track of the data in 2016. According to a recent analysis by Realtor.com, Phoenix, Tampa, and Jacksonville were the metro regions with the highest number of listings with reduced prices in April.
“Most markets in the Northeast and Midwest, however, are still quite tight and even look like they did during the pandemic – inventory remains low, and price growth is more robust,” said Krimmel. “Regional data suggest a bifurcated housing market, an important story obscured by the national numbers.”
News Corp. subsidiary Move Inc. runs Realtor.com, while News Corp. also owns MarketWatch publisher Dow Jones.
According to a recent research, Zillow (Z), a real estate website, predicts that home values will decrease by 1.4% this year. By the fourth quarter of 2025, real estate agency Redfin (RDFN) predicts that home prices will have dropped 1% from the same period the previous year.
