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Home Prices Still Growing – Just at a More Normal Pace

Are you feeling a bit perplexed about what’s happening with home prices? You’re not alone. With conflicting reports and misinformation circulating, it’s easy to get mixed messages. To cut through the noise and provide you with reliable insights, here’s a breakdown of what you really need to know, backed by trustworthy data.

Understanding Normal Home Price Seasonality

In the world of real estate, there’s a concept called seasonality, which refers to the predictable ebbs and flows that occur throughout the year. The peak homebuying season typically falls during spring when the market is bustling with activity. Summer follows suit with strong market dynamics. However, as the cooler months approach, this activity tends to taper off.

Home prices closely mirror this seasonality trend, as prices appreciate most when demand is at its peak. Consequently, a consistent long-term trend emerges. The graph below, using data from Case-Shiller spanning from 1973 through 2022 (unadjusted to showcase seasonality), illustrates this:

As the data indicates, at the beginning of the year, home prices experience growth, albeit not as substantial as during the spring and summer markets. The market tends to be less active in January and February due to fewer relocations in the cooler months. As the housing market transitions into the peak homebuying season during spring, activity surges, and home prices respond with significant appreciation. Subsequently, as fall and winter approach, prices continue to grow, albeit at a more moderate pace as activity subsides.

This Year, Seasonality Returns

Now, let’s compare this year’s data to the long-term trend (refer to the graph below):

The green bars represent this year’s data, while the dark bars depict the established trend. As observed, the green bars are beginning to align with the typical market behavior, marking a positive shift towards more sustainable price growth compared to the recent years of rapid appreciation.

In summary, it’s crucial to clarify that national home prices are not plummeting. Instead, price growth is returning to a more normalized pattern. As we move forward, there’s a possibility that media outlets may misinterpret this deceleration of price growth as an actual decline in prices. Therefore, it’s essential not to take everything you read in headlines at face value. Seek the guidance of a trusted real estate professional to gain a deeper understanding.

Remember, it’s entirely normal for home price appreciation to slow down as the year progresses. This slowdown does not signify a price drop; rather, it indicates a shift towards more moderate and sustainable growth.

In Conclusion

Home price appreciation is returning to its customary seasonality, which is a positive development. If you have questions or seek insights into price trends in our local area, please don’t hesitate to connect with us. At The Freund Group, we’re here to provide you with accurate information and expert guidance regarding real estate trends in League City and the surrounding areas. 🏡📈

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