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Beware of Misleading Home Price Headlines

It's easy to feel concerned about the direction of home prices when you hear snippets from the latest news reports. However, it's crucial not to let these headlines confuse you because they often fail to present the complete picture.


Contrary to what you might think from some media coverage, the national data for 2023 actually indicates positive growth in home prices overall. While there were a few months where prices experienced slight declines at a national level, these instances were exceptions rather than the rule.


In essence, the overarching narrative is one of increasing home prices throughout the year, not a decline. Let's delve deeper into the data to clarify any misconceptions.


2023: A Return to Normal Home Price Growth


Last year, if anything, marked a return to a more typical pattern of home price appreciation. To understand this, let's examine the usual ebbs and flows within the housing market, often referred to as seasonality.


In real estate, there's a predictable cycle that unfolds each year. Spring tends to be the peak homebuying season, characterized by heightened market activity. This momentum typically carries into the summer months before gradually tapering off towards the year's end. Home prices tend to follow this seasonal trend, with the most significant growth occurring when demand is high.


Data from Case-Shiller spanning from 1973 to 2022 illustrates this seasonal pattern in home prices (not adjusted for clarity):



This historical data demonstrates how home prices typically align with market seasonality over the years. Prices tend to increase moderately at the beginning of the year when market activity is lower, peak during the spring homebuying season, and then stabilize as fall and winter approach.


Now, let's overlay the data for 2023 (highlighted in green) onto this long-term trend (shown in blue) to see how it compares:



As depicted in the graph, the appreciation in home prices during 2023 closely mirrors the long-term seasonal trend observed in the housing market. However, media headlines tend to focus solely on isolated instances, often overlooking the broader context.

It's crucial to recognize that slight fluctuations in home prices, especially during the fall and winter months, are typical and expected as part of seasonal patterns. When viewed holistically, home prices continued to rise overall throughout the year.


What You Need to Keep in Mind

Media headlines often emphasize short-term fluctuations, which can be misleading when assessing the broader trend. In reality, 2023 saw a return to normal seasonality in the housing market, a positive development following unsustainable price surges during the pandemic's peak.


If you're worried about the possibility of declining home prices, rest assured that experts anticipate continued appreciation in the coming year. Factors such as lower mortgage rates and persistent buyer demand, coupled with limited housing supply, are expected to exert upward pressure on prices.

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