Recent data reveals that nearly one third of the largest housing markets in the United States are currently experiencing declining home prices. High flying cities such as Austin and Tampa are even in the double digits for price cuts. Moreover, seven of the ten largest California metro areas are experiencing these kinds of reversals. Since early 2022 mortgage rates have skyrocketed into the high 6% range for the majority of the year. This shift is a sharp contrast to the much lower rates that were in place during the onset of the pandemic.
Today’s economic situation is extremely dynamic, with rapidly changing home values on a regional and sometimes local level. Nationally, prices for single-family homes are up 1.6% while prices for condominiums are down 1.4%. In June, home prices increased 1.3%, down from 1.6% in May. This third trend is a notable departure from the price appreciation pace seen earlier in the spring.
The South and West are both undergoing a downturn in home values. At the same time, the Northeast and Midwest are booming, riding high on tremendous economic growth. Cape Coral, Florida, stands out with a notable decline of just over 9% in home prices, underscoring the challenges faced by certain markets.
Our recent analysis shows that about a third of the 100 largest markets are experiencing not just cooling markets, but constant annual price decreases. These declines are a minimum of one percentage point. Andy Walden, head of mortgage and housing market research at ICE, notes that the housing market is experiencing a rapidly changing landscape. This evolution illustrates two foils in competition with one another.
“There are two competing forces in the housing market right now,” – Andy Walden
The current average rate on the 30-year fixed mortgage has more than doubled. Today it’s two times what it was in the early pandemic epoch, pushing large market swings. According to experts, if today’s price trends persist, even more markets could be experiencing such annual price drops before you know it.
As the landscape further evolves, real estate professionals and potential homeowners at all levels will be keeping their ears to the ground for the latest updates. The housing market’s dynamism continues, showing different trends impacting places all around the country.