Home Price Growth Is Moderating – Here’s Why That’s Good for You

Home Price Growth Is Moderating – Here’s Why That’s Good for You

Over the last few years, home prices have surged, which has been a source of frustration for many buyers left wondering if homeownership was out of their reach. However, there is now some encouraging news: the rapid increase in home prices is beginning to decelerate.

Home Prices Are Rising at a Healthy Pace

Nationally, while home prices continue to rise, they are doing so at a much more sustainable rate. For instance, in November, the year-over-year increase in home prices was just 3.8%, according to Case-Shiller. This is significantly lower compared to the double-digit growth seen in 2021 and 2022, indicating a return to more normal price appreciation levels (refer to the graph below for details):

The return to a more typical rate of home price growth may make the prospect of buying a home seem more achievable for many. The absence of the severe sticker shock and swift price increases that previously made planning a purchase difficult should now ease those concerns.

Moreover, the steady growth in home prices suggests that a home bought today is likely to appreciate in value over time, providing a solid investment.

Prices Vary from Market to Market

While the national trend indicates moderate growth, it's crucial to recognize that real estate conditions can vary significantly by region. Some local markets might be experiencing stronger growth, while others may be stabilizing or even seeing slight declines in home prices. As Selma Hepp, Chief Economist at CoreLogic, points out:

“Regionally, variations persist, as some affordable areas – including smaller metros in the Midwest — remain in high demand and continue to see upward home price pressures.”

Meanwhile, other regions saw slight month-over-month declines in November, according to Federal Housing Finance Agency (FHFA) data (see graph below):

What does this mean for you? Understanding the dynamics of your local real estate market is essential, as national averages only provide a broad overview. This is where the expertise of a local real estate agent becomes invaluable. They possess the tools and knowledge to offer a detailed understanding of what’s happening locally and can help you strategically plan your home purchase.

Bottom Line

Home prices are now increasing at a more manageable rate, making this an opportune time to consider buying. By collaborating with a local real estate agent, you can effectively navigate the specific conditions of your market.

How have the recent changes in home prices affected your plans to buy a home? Let's discuss how you can leverage these conditions to your advantage.