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Are home prices decreasing?

Last week’s FRED Blog post looked at the rising mortgage burden for US households: It discussed how recent increases in interest rates and outstanding mortgage loan balances offset growth in disposable income. A larger financial burden of paying back new mortgage loans is likely to decrease housing demand and, other things being equal, lower housing prices.

The FRED graph above shows the percent change from a year ago in three different, yet related, home price indexes. We highlight the past decade of available data because, for almost all that time, the monthly S&P/Case-Shiller US national home price index (the red line) grew year over year. Only in April 2023 did home prices decrease relative to the previous year. However, relative to the previous month, the price index increased. You can see for yourself in this FRED graph of index levels and month-over-moth percent growth rates.

So, are home prices decreasing? The answer depends on whether you choose a monthly or an annual base for calculating their growth. Keep in mind that the index recorded its all-time high in June 2022 and that the data are not seasonally adjusted. It is difficult to eyeball data trends under those conditions.

The two alternative measures of home prices shown in the FRED graph above may help you add some context to the data. Both the quarterly all-transactions house price index (the green line), produced by the US Federal Housing Finance Agency, and the monthly Zillow home value index for all homes (the blue line), produced by Zillow.com, show a steady slowdown in their year-over-year growth. However, at the time of this writing, neither marks a decrease in home prices from a year ago.

Bookmark this FRED graph and visit it next month to be the first one to know about home price growth when the graph updates with the latest available data.

Learn more about… housing price trends and how these price indexes are constructed.

How this graph was created: Search FRED for and select “Zillow Home Value Index (ZHVI) for All Homes Including Single-Family Residences, Condos, and CO-OPs in the United States of America.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “S&P/Case-Shiller U.S. National Home Price Index” and “All-Transactions House Price Index for the United States.” Last, select “Line 1” and change the units to “Percent change from year ago.” Click on “Copy to all” to apply the change to the other two series.

Suggested by Diego Mendez-Carbajo.

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