While overall home prices are increasing across the country, some markets have seen prices dip compared to where they were a year ago.
The National Association of Realtors has reported that the median price for single-family homes increased in the fourth quarter to $378,700, a jump of 4% compared to a year ago.
However, not everywhere in the country saw prices jump year over year at the same pace. In the West, prices rose by the least, jumping 2.6%, while in the Northeast, prices rose the most, shooting up 5.3%. The Midwest saw prices rise by 4%, while the South saw them increase by 4.9%, the NAR reported.
When looking at prices at the market level, the NAR found that 20 of the 186 cities monitored by the group saw prices drop in the fourth quarter of last year.
Among the cities that saw prices drop included San Jose, California, decreasing 5.8% compared to a year ago; San Francisco, California, dropping 6.1%; Boise, Idaho, falling 3.4%; Anaheim, California, down 1.6%; Austin, Texas, down 1.3%; Los Angeles, California, falling 1.3%; and Boulder, Colorado, down 2.0%, the NAR reported.
While the price decrease is a step in the right direction, the decreases came in cities already considered some of the most expensive places to buy a home.
For example, in the fourth quarter, the NAR listed San Jose as the most expensive place to buy a home in the U.S., despite it seeing prices fall 17% from their peak when the median home price was $1.9 million in the second quarter last year. They now sit just below $1.6 million.
Other cities that saw prices fall but are considered among the top 10 most expensive to buy a home in the country include Anaheim, Los Angeles, San Francisco, and Boulder.
Part of the reason prices are decreasing in these areas comes from what NAR’s chief economist Lawerence Yun calls “weaker employment and higher instances of residents moving to other areas.”
While overall median prices have risen, the NAR noted that the fourth quarter’s 4% rise is a welcome sign that relief is coming, as the third quarter saw prices rise 8.6%. Yun noted that the relief is needed, as prices have far surpassed the wage increases and consumer price inflation throughout the last half-decade.
“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” Yun shared with CNN.
The change in prices comes as those who are getting into home buying continues to change, with more people being priced out of homes than ever before last year.
A recent report from the real estate brokerage firm Redfin shared that in 2022 alone, the number of affordable listings dropped by 53% compared to 2021, a statistic Redfin says is the largest drop dating back to 2013.
With that, the report found that more millennials are deciding to rent as they can’t afford the prices of buying.
“Many millennials were able to buy homes before or during the pandemic homebuying boom, but many others were priced out of homeownership and forced to keep renting,” Taylor Marr, the deputy chief economist for Redfin, said.
The Redfin report noted that several major metropolitan areas across the country saw their affordable listings fall last year, including Minneapolis (-51.9%), Detroit (-16%), Philadelphia (-28%), Pittsburgh (-27%), Dallas (-67.3%), Fort Worth (-69.3%), San Francisco (-53%), Baton Rouge (-51.5%), St. Louis ( -30.5%), and Los Angeles (-80.2%).
However, much of what happened in the housing market last year was caused by the skyrocketing mortgage rates thanks to the Federal Reserve’s plans to fight inflation. The NAR reported that home buying in 2022 fell by 18% compared to 2021.
While the drop in demand of buyers would typically mean prices are going to fall, the housing market has not been typical, as the NAR reported that single-family home prices climbed in almost 90% of metro areas it tracked.
Part of the reason for the strange market is due to would-be-sellers not wanting to part ways with their low mortgage rates, creating a decrease in supply that matches the decrease in demand, Yun shared.
“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” Yun said. This means a return to normal could be further down the road than expected.
LISTEN on the Audacy App
Sign up and follow Audacy
Facebook | Twitter | Instagram