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One of the biggest questions people are asking right now is: what’s happening with home prices? As the market continues to shift, many are wondering if they should wait for prices to drop, or make their next move now. Despite headlines about ongoing price appreciation, some sellers are actually reducing the price of their homes. That can feel confusing, leaving homeowners and first time buyers wondering what their current options are.

Do not lose faith. Navigating any market is possible with accurate information. Let’s begin by breaking down the differences among these frequently used terms to help clarify what’s actually happening today.

  • Appreciation is when home prices increase.
  • Depreciation is when home prices decrease.
  • Deceleration is when home prices continue to appreciate, but at a slower or more moderate pace.

Experts agree that, nationally, what we’re seeing today is deceleration. That means home prices are appreciating, just not at the record-breaking pace they have over the past year. In 2021, data from CoreLogic tells us house prices appreciated by an average of 15% nationwide. And earlier this year, that appreciation was upward of 20%. This year, housing experts forecast prices will appreciate at a decelerated pace of around 10 to 11%, on average.

The graph above uses the latest data from CoreLogic to help tell the story of how house prices are decelerating, but not depreciating so far this year. As the pink bars show, home prices appreciated between 19-20% year-over-year from January to March. But over the last few months, the pace of that appreciation has decelerated to 18%. This means price growth is still climbing compared to last year but at a slower rate.

As the Monthly Mortgage Monitor from Black Knight explains:

“Annual home price growth dropped by nearly two percentage points . . . – the greatest single-month slowdown on record since at least the early 1970s. . . While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”

Basically, while moderating, home prices are still far above the “norm”, and we’d have to see a lot more deceleration to even fall in line with more typical rates of house price growth. Note: We are still not encountering home price depreciation.

The big takeaway is home prices haven’t fallen or depreciated nationwide, they’re just decelerating or moderating. While some unique and overheated markets may see declines, nationally, home prices are forecast to appreciate. And when we look at the country as a whole, none of the experts project home prices will net depreciate or fall. They’re all projecting ongoing appreciation.

Bottom Line

No matter where you’re at in your homeownership journey, the best way to make sure you’re set up for success is to work with a real estate professional. If you have questions about what’s happening with house prices in our local area, send us a message and we will be in touch shortly!

For local market tips and expert advice, get in touch with our team.

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