Real estate prices turn negative for the first time in over 2 years

Home prices are finally down from last year, albeit very partially, according to daily readings from Parcl Labs, which examines high-frequency listing data on new and existing single-family homes, condos and townhomes.

They could remain lower, however, as house prices have fallen by 1.4% in the last three months alone.

Nationally, home prices have not gone negative since mid-2023, a year after the Federal Reserve first raised rates from zero, and mortgage rates rose sharply. From March 2022 to June 2023, the average rate on the popular 30-year fixed mortgage rose from 3.9% to just over 7%, according to Mortgage News Daily.

But even then, prices remained negative year over year for only a few months. This has nothing to do with the Great Financial Crisis, when home prices fell 27 percent from their peak in 2006 to their trough in 2012, according to the S&P Case-Shiller National Home Price Index.

“More recently, we have seen a period of national softness emerge after the rapid rise of the Covid years, 2020 to 2022,” said Jason Lewris, co-founder of Parcl Labs. “The sharp rise in mortgage rates in 2022 and 2023 created an affordability shock: buyers were priced out, sales volumes fell and sellers had to adjust their expectations. Historically, this combination of a credit or affordability shock, lower demand, and more inventory than the market can easily absorb is what tends to produce large price declines nationally.

Today, stocks are still historically low, but they have come off their near-record lows in recent years. Active listings in November were nearly 13% higher than in November 2024, but new listings were only 1.7% higher, according to Realtor.com. Sellers are also taking their homes off the market at an unusually high rate.

Prices nationwide are down less than 1%, but some markets are seeing larger declines: Prices in Austin, Texas, are down 10% from last year; in Denver, they are down 5%, according to Parcl Labs. Tampa, Florida, and Houston both saw prices drop 4%, and Atlanta and Phoenix saw prices drop 3%.

There are also rising markets: in Cleveland, prices are up 6%; Chicago and New York both saw their prices increase by 5%; Philadelphia saw prices rise 3%; and Pittsburgh and Boston both saw prices rise 2%, according to Parcl.

While other house price indexes and surveys only measure the value of existing homes, this one measures both new and existing homes. There is no government data on housing starts, building permits or sales of newly constructed homes since before the government shutdown began, so it is difficult to paint a picture of supply in price forecasts.

That said, manufacturers reporting quarterly results indicated that demand is still relatively weak and incentives are still needed. Homebuilder sentiment is still in negative territory.

“We continue to see weakness on the demand side as a slowing labor market and strained consumer finances contribute to a challenging sales environment,” Robert Dietz, NAHB chief economist, said in a November statement. “After a decline in single-family housing starts in 2025, NAHB projects a slight gain in 2026 as builders continue to report future sales conditions in slightly positive territory.”

Mortgage rates haven’t moved much over the past three months and reacted very little to the Federal Reserve’s latest rate cut on Wednesday. It is therefore unlikely that property prices will have a significant impact.

“Our base case is not a deep national downturn, but a period where prices hover around zero, with slight positive or negative swings from year to year, rather than the double-digit gains of the pandemic era,” Lewris said. “The extent to which they move in one direction or the other will depend primarily on mortgage rates and the overall health of the economy.”