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U.S. home prices this past spring plummeted in western states and continued their downturn in the South, even as they built upward momentum in the Northeast and Midwest.
The result was a 2.4 percent annual decline in the median U.S. single-family existing-home price in the second quarter of the year, according to the latest report from the National Association of Realtors. That’s a bigger annual drop than in the first quarter, when prices were 0.2 percent lower year-over-year.
“Home sales were down due to higher mortgage rates and limited inventory,” NAR Chief Economist Lawrence Yun said in the report. “Affordability challenges are easing due to moderating and, in some cases, falling home prices, while the number of jobs and incomes are increasing.”
The softening in home prices largely reflected weakness in states in the Mountain West and along the Pacific, where home prices fell 5.8 percent year over year in the second quarter.
The American South also contributed substantially to the price decline. Nearly half of homes sold in the second quarter of the year — 46 percent of them — occurred in the South, where prices fell 2.2 percent from the same time last year.
But agents in most U.S. markets could be forgiven if they were surprised by this overall picture. In nearly 60 percent of markets, home prices rose in the second quarter, NAR reported.
These markets were concentrated particularly in the Northeast — where prices rose 3.2 percent over the past year — and the Midwest, which experienced annual price growth of 1.4 percent.
“Just like the weather, large local market variations exist despite the minor change in the national home price,” Yun said in the statement.
The places where home prices fell fastest over the last year tended to be big cities that either saw rapid price runups in the early pandemic — such as Austin, which saw a nation-leading 19 percent annual decline in prices in the second quarter — or already-expensive hubs like San Francisco, where prices fell 11 percent.
But in a number of small-to-mid-sized markets in the Midwest and Northeast, things couldn’t have felt more different.
Home prices rose a staggering 25 percent over the previous year in Fond du Lac, Wisconsin, more than in any of the other 220 markets analyzed.
Annual price gains exceeded 12 percent in New Bern, North Carolina; the Duluth market straddling the Minnesota-Wisconsin border; and the greater Davenport-Rock Island metro area split between Iowa and Illinois.
But the number of places with double-digit annual price increases fell to 5 percent of markets in the second quarter, down from 7 percent in the first three months of the year.
