Just When They Started Falling, Home Prices May Be on the Rise Again

For a few months there, home prices had been slowly falling, offering a glimmer of hope to discouraged house hunters. But new data now shows the relief may have been short-lived. 

For the first time in nearly five months, the median price of a home sold in the U.S. is higher than it was at this time last year, according to a four-week rolling average compiled by real estate broker Redfin. That average as of July 9 was $383,750 — 1.5% higher than during the year-ago period. 

Sale prices are up the most in Milwaukee, where they’re 14% higher, followed by Providence, Rhode Island (9.2%,) Miami (7.8%,) Cincinnati (6.7%) and Newark, New Jersey (6.7%.)

Prices for homes started easing earlier this year after mortgage rates more than doubled to near their two-decade high, taking the steam out of the frenetic real estate market of the pandemic years. Still, it hasn’t been a big shift, largely because prospective buyers have so few listings to choose from, they’re not always in a position to negotiate. Redfin said the latest $383,750 median is just $2,500 shy of the record set in June 2022.

“Prices are rising despite relatively low demand because there are so few homes for sale,” Redfin wrote in its report. “That’s mostly because potential sellers are locked in by low rates. Nearly all homeowners have a rate below 6%.”

Several other measures of selling prices haven’t shown any pivoting to year-over-year increases, having in some cases just started showing declines. But they aren’t using data that’s as recent. 

One of the most widely regarded benchmarks from the National Association of Realtors shows the median selling price for a home has been falling since March when compared with the same month a year earlier. March’s decline, the first drop since 2012, marked a major shift from the double-digit increases seen every month for almost two years during the pandemic. The NAR median as of May, the most recent, was $396,100 — 3.1% lower than the median in May 2022.

While Redfin’s overall median pivoted upward, sale prices did decline in 19 of the 50 metro areas analyzed by Redfin, with the biggest year-over-year drops in Austin, Texas (9%,) Detroit (7.4%), Las Vegas (6%,) Phoenix (5.5%,) and Fort Worth, Texas (5.3%.)

The number of new listings is 27% lower than at this time last year, a bigger difference than at any time since May 2020, another four-month rolling average tracked by Redfin showed. New listings are down in all of the 50 metro areas Redfin analyzed.

It should be noted that Redfin’s median home price has been steadily rising for months, not falling, when compared to the most recent prior period. But comparing selling prices to the same period in previous years is considered to be more telling because the mix of homes that sell changes depending on the season. For example, families with children tend to buy larger houses and want to make a move over the summer, during school vacation.