Home prices are down from record highs. A declining trend is evident for existing and new homes.
Why It Matters:
- Improved buying opportunities are ahead.
- The market is correcting to post-COVID stimulus realities.
- Buyers will eventually get back into the market.
Going Deeper: Existing Home Sales
Existing home prices (first chart below) are down 3.3% since the mid-2022 high. The decline is milder than the onset of Housing Bubble Debacle. We have noted on numerous occasions that the current situation is not like the housing crisis of the Great Recession.
- Homeowner mortgage qualification is much more rigorous.
- Inventories are low.
- Builders have not set the market up for a future glut.
- Consumers are in much better financial shape.
- Real incomes are rising.
The points above mean that the long-term trend of rising home prices will ensue once this market correction is complete. Buying opportunities are ahead, especially considering this is not 2006−2009.
Going Deeper: New Home Sales
New home prices really benefited from the circumstances of COVID. The 62.7% increase to the October 2022 record high was notable for how quickly we got to that number. That takes some of the fear that typically appears when a market correction is occurring.
The 11.8% drop in prices after four months is steeper than normal, which makes sense given the circumstances of the run-up in process. The chart below shows that recessions interrupt new home price rising trends. However, prices recover and ascend to new heights. This time will be no different. Get ready to be a buyer.
Be aware of the trends but, most importantly, find the right location.