Don’t look now, but US home prices just fell.
I realize that might elicit some incredulity, so let me emphasize that yes, by “fell” I do indeed mean prices moved lower in April.
Where to begin with the caveats? First, I’m obviously referring to a MoM decline, not a decline versus the same month a year ago. On a 12-month basis, home prices are still rising at a ~4% pace.
Second, the decline was a mere 0.05%. Insert a tired joke. Like this one: Can you feel the savings?!
Third, mortgage rates are stuck at or near 7%, which is to say ~double where they were on the eve of the pandemic. Over that same period, prices are up 30% (at least). Suffice to say stretched buyers are going to need a little more in the way of a discount than 0.05%.
I could go on. And yet the decline, as reported by Redfin on Tuesday, is still notable. As the figure below shows, it’s the first drop since September of 2022.
As noted above, prices are still rising on an annual basis, and meaningfully so. But at 4.1%, the YoY increase on the same Redfin gauge was the slowest in nearly two years.
In the editorial accompanying the linked Redfin piece, Mark Worley observed that prices fell in half of the most populous US metro areas, including by 1% in Charlotte. (Having shopped around in that particular market a few years ago, I can tell you it’s pretty unforgiving in the context of an otherwise affordable southern region. It wouldn’t surprise me to see a hangover there.)
As a quick reminder: Redfin’s index uses the same general methodology as the (far) more famous S&P CoreLogic Case-Shiller gauge, but Redfin’s is published on a one-month lag rather than the two-month delay for the Case-Shiller index.
The update comes ahead of Thursday’s NAR tally for existing home sales covering April. Redfin has their own data for that too, and it suggested the pace of contract signings slipped to the slowest since October last month, falling 0.2% from March and more than 1% from the same period a year ago.
That data set also showed the median sale price in April rose a mere 1.4% YoY. And yet, as Lily Katz reminded her readers, buyers were nevertheless confronted with the highest monthly housing payments on record.
So, to answer my own sarcastic, rhetorical question, “no.” No one can “feel the savings.”
Many formerly hot major metros now have -1% to -5% YOY price declines using Zillow numbers which I’d guess are similar to Redfin numbers? In CA San Diego and San Francisco, much of TX incl Houston, Dallas, Austin, lots of FL incl Tampa, Miami, Orlando, Atlanta, etc etc. Housing market is finally rolling over. Condos and second/vacay house worse. The decade-long house price run has been huge, but considering affordability, rates, macro it looks d-o-n-e.
Agreed, John. Lower-end 2- and 3-family buildings near me (northern NJ adjacent to Manhattan) are coming down and just today I was sent a follow up email from 6 months ago for a self-storage location on Long Island that still hasn’t sold and has a new, lower asking. I’m betting that savvy RE investors are parked and waiting for a pounce in the short to medium term.
Meanwhile, starts for single-family build-to-rent houses have climbed to about 20K/qtr – about one-fifth of total starts of all for-rent units (the rest are the traditional multi-family units).