Home Prices Still Growing – Just at a More Normal Pace

If you’re feeling a bit muddy about home prices, that’s no surprise. Some people still say prices are falling, even though data proves otherwise. Part of that misconception is that people get their information from unreliable sources. But it also comes from some media coverage misrepresenting the data.

So, to keep things simple, here’s what you need to know using real data you can trust.

Normal Home Price Seasonality Explained

In the housing market, predictable ebbs and flows happen each year. It’s called seasonality. Spring is the peak homebuying season when the market is most active. That activity is typically strong in the summer but begins to wane as the cooler months approach.

Home prices follow along with seasonality because prices appreciate most when something is in high demand. That’s why there’s a reliable long-term home price trend.

The graph below uses data from Case-Shiller to show the typical percent change for monthly home price movement from 1973 through 2022 (not adjusted so that you can see the seasonality):

49-Year Average Monthly Price Movement - Data by KM Realty Group LLC, Chicago

As the data shows, home prices grow at the beginning of the year but not as much as when entering the spring and summer markets. The market is less active in January and February since fewer people move in the cooler months.

As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices increase significantly more. Then, as fall and winter approach, prices still grow, just at a slower pace, as activity eases again.

This Year, Seasonality Has Returned

Now, let’s look at how this year compares to that long-term trend (see graph below):

49-Year Average vs. 2023 Price Movement - Data by KM Realty Group LLC, Chicago

Here’s the latest data for this year from that same source. Just like before, dark bars are a long-standing trend. The green bars represent what’s happened this year. As you can see, the green bars are beginning to fall in line with what’s normal for the market. That’s good because it’s more sustainable price growth than we’ve seen in recent years.

In a nutshell, nationally, prices aren’t falling; it’s just that price growth is beginning to normalize. Moving forward, there’s a chance the media will misrepresent this slowing of home price growth as prices fall. So don’t believe everything you see in the headlines.

The data included here gives you the context to understand what’s happening. So, if you see something confusing in the headlines, don’t just take it at face value. Ask a trusted real estate professional for more information.

Remember, it’s normal to see home price growth slow down as the year progresses. And that doesn’t mean home prices are falling. They’re just rising at a more moderate pace.

Bottom Line

Home price appreciation is returning to normal seasonality and that’s a good thing. If you have questions about what’s happening with prices in our local area, schedule a free consultation with Chicago’s top-rated real estate professionals!