If you hear that the housing market has crashed, consider this.
Nearly 40% of markets across the country are back at peak home prices on a seasonally adjusted basis, according to a new report from Black Knight.
These markets are primarily located in the Midwest and Northeast, along with South Florida.
And six other markets are within 1% of last year’s peak, meaning half the country remains near all-time highs.
Of course, there are some markets on the other end of the spectrum as well.
The housing market has not yet collapsed
While the bears from the housing sector lick their might at any bit of potentially bad news, the data continues to tell a different story.
The latest Black Knight Mortgage Monitor report revealed that home prices rose during the month of March on an unadjusted, seasonally adjusted basis.
Property values rose a seasonally adjusted 0.45% in March (+1.38% unadjusted), marking the third consecutive month of increases.
And 92% of housing markets nationwide saw price increases during the month.
However, prices are only up 1.0% year-over-year, as the rate of rise (which was clearly unsustainable) continues to slow.
This rate of rise has decreased by about 1.3-1.4% each month since the start of 2023, according to Black Knight.
A few months ago, home prices were declining month to month on a seasonally adjusted basis in 92% of US metros.
In March, home prices increased in 92% of the markets compared to the previous month, by 180.
But the company expects the annual growth rate of home prices to be “about 0% by April.”
Decreased supply leads to higher house prices and limits the negative trend
The housing market narrative continues to be driven by inventory, or lack thereof. Bears argue that housing prices are unsustainable.
And while they’re not necessarily wrong, the lack of supply has allowed house prices to stay at high levels and even post some monthly gains.
This same lack of supply limits the downward move, with the supply of active listings for sale declining for the sixth month in a row.
It’s now at its lowest level since April last year, driven by 30% fewer new listings that hit the market in March compared to pre-pandemic standards.
That puts current available inventory at just 2.6 months of supply on a seasonally adjusted basis, which Black Knight says indicates “a return of range to sellers.”
So the buyer’s market that we saw in 2022 may have really come and gone, although it could return if mortgage rates remain high and supply increases as the year goes on.
Where home prices remain at their peak
First, nationally, home prices are only 1.7% below their peak in June 2022 (seasonally adjusted).
This is an improvement from the -2.6% decline in December.
Surprisingly, however, about 40% of the country’s housing markets are at peak levels, despite mortgage rates approaching 7%.
Birmingham, Detroit, Houston, Orlando, New York and the District of Columbia are all within 1% of their all-time highs.
Even more impressive, some metropolitan areas are still demanding close to double-digit home price increases annually.
Take Miami, where home prices are up 9.5% from a year earlier, or Hartford, CT (+7.7%), Kansas City, MO (+5.5%), Cincinnati, OH (+5.2%), and Virginia Beach, VA (++ 5.0%).
It’s really amazing to see these types of gains on a year-over-year basis given the fact that the 30-year constant rate has gone from about 3% to about 6.5% today.
Where home prices fall the most
Of course, not all news is good. And real estate will always be local. On the other hand, home prices are down 11.6% in San Jose compared to last year.
Similar declines can be seen in Austin, Texas (-11.2%), San Francisco, California (-11.1%), and Seattle, Washington (-10.8%).
Real estate values have also been hurt in metro hot spots such as Sacramento, Phoenix, Las Vegas, Salt Lake City, San Diego and Los Angeles.
Austin, Texas, was the worst, with house prices now down 15.5% from their peak in 2022.
This may explain the negative sentiment from housing bears in that area of the country.
Double-digit declines can also be seen in San Jose, San Francisco, Seattle, Phoenix, and Las Vegas.
But given how much home prices have increased in these metropolitan areas, especially in such a short period of time, this isn’t much of a surprise.
for the same reason , The shift in prices looks more like a correction than a crash Given the massive gains before the fall.
To sum things up, real estate is local. Some markets are still buoyant, others are correcting.
The housing market is weathering the mortgage rate storm thanks to continued supply shortages.
If and when that changes, the narrative may change, too.