The Return of Normal Seasonality for Home Price Appreciation

The Return of Normal Seasonality for Home Price Appreciation

One of the most important things you probably want to know right now if you want to move is what's going on with home prices. Home prices aren't going down across the country, despite what you may be hearing in the news. It's just that price rise is starting to return to normal. This is the background you need to fully grasp that trend.

There are certain waves that happen every year in the housing market that you can count on. It's known as seaonality. The market is busiest in the spring, when most people are looking to buy a house. That kind of action is usually still going strong in the summer, but it starts to slow down as fall and winter come around. Prices of homes change with the seasons because things are most valuable when they are in high demand.

That's why there is a steady long-term trend in home prices. Case-Shiller data is used in the graph below to show how home prices have changed on a monthly basis from 1973 to 2022 (not adjusted, so you can see the seasonality):

There is some growth in home prices at the start of the year, but not as much as there is in the spring and summer. The market isn't as busy in January and February because fewer people are moving during those months. In the spring, when more people are looking to buy a home, the market really heats up, and as a result, home prices go up a lot more. Then, as fall and winter near, things slow down again. Even though price rise slows, prices still usually go up.

After a few "unicorn" years that were out of the ordinary, today's higher mortgage rates helped bring back the first signs of seasonality. Chief Economist at CoreLogic Selma Hepp says it this way:

“High mortgage rates have slowed additional price surges, with monthly increases returning to regular seasonal averages. In other words, home prices are still growing but are in line with historic seasonal expectations.”

Why it's so important to understand this

There will be more talk about home prices in the news in the coming months. When they write about it, they'll probably use terms like these:

Appreciation: When prices go up.
Deceleration of Appreciation: Prices keep going up, but at a slower or more reasonable rate. 
Depreciation: Prices go down

Don't get confused by the words or let false news make you afraid for no reason. The market couldn't keep up with the fast rate of home price growth seen in the last few years. At some point, it had to slow down, and that's what we're starting to see: value growth slowing down, not value loss.

Remember that it's normal for price increases in homes to slow down as the year goes on. And that doesn't mean that home values are going down. It's just that they're rising more slowly.

In Conclusion

The news about home prices is making people scared and confused, but the truth is easy to understand. The normal seasonal patterns of home price growth are back. Let's talk about what's going on with prices in our area if you have questions.