Home Prices Slip Into the Red for the First Time Since 2023
After two years of relentless affordability pressure, U.S. home prices have finally dipped below last year’s levels — if only slightly.
High-frequency data from Parcl Labs shows national prices down less than 1% year-over-year, with a deeper 1.4% drop over the past three months.
This marks the first negative reading since mid-2023, when the Federal Reserve’s aggressive rate hikes pushed mortgage rates above 7% and froze demand.
Unlike the 2006–2012 housing crash, today’s decline is mild — but the forces behind it are classic:
- A sharp affordability shock
- Rising inventory
- Softening buyer demand
- Sellers adjusting expectations
“Affordability shocks historically produce broad price declines,” said Jason Lewris of Parcl Labs.
Inventory Rising — But Not Fast Enough to Reset the Market
Housing supply is no longer at the rock-bottom levels seen in 2021–2022, but the recovery is limited:
- Active listings: +13% year-over-year
- New listings: barely +1.7%
- Seller withdrawals: unusually high
This push-and-pull has created pockets of weakness, especially in overheated Sun Belt markets.
Markets Seeing Notable Declines
- Austin: –10%
- Denver: –5%
- Tampa & Houston: –4%
- Phoenix & Atlanta: –3%
Markets Still Rising
- Cleveland: +6%
- Chicago & NYC: +5%
- Philadelphia: +3%
- Pittsburgh & Boston: +2%
The national picture is being pulled in opposite directions — Midwestern affordability remains a plus, while Western and Southern markets continue to deflate after pandemic-era surges.
Builders Say Demand Is Still Weak
With federal economic data frozen during the government shutdown, builders have become the clearest window into supply conditions — and the message is consistent:
Demand remains soft, incentives remain necessary, and sentiment remains negative.
The NAHB expects:
- A decline in single-family starts in 2025
- A slight rebound in 2026
The takeaway: Builders aren’t preparing for a surge in demand anytime soon.
Mortgage Rates Are Stuck — So Prices Likely Will Be Too
Despite recent Fed rate cuts, mortgage rates have barely budged — holding in a narrow band for three months. That stability removes both catalysts:
- No big drop to spark a buying boom
- No spike to trigger a major correction
The most likely scenario?
A long stretch of near-zero home price growth.
Lewris summed it up:
“Our base case is not a deep downturn, but a period where prices hover around zero — small gains or small declines — rather than pandemic-era surges.”
WSA Take
The housing market has finally cracked, but only slightly — and not in a way that restores affordability for most buyers. Without meaningful rate relief or a surge in supply, this is shaping up to be the most frustrating outcome of all: a stagnant market stuck between high prices and weak demand.
Flat home prices may not be a crisis, but they’re far from the reset many Americans were hoping for. The real story to watch in 2026: whether mortgage rates meaningfully break lower, or whether U.S. consumers remain locked in place.
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