Following a charge shock-induced correction within the second half of 2022, U.S. dwelling costs stabilized and started a modest ascent in early 2023. Amid lingering housing affordability challenges at ranges not witnessed in 4 many years, common dwelling costs within the nationwide single-family housing market elevated as a result of a scarcity of resale stock and a scarcity of distressed properties. In keeping with the Zillow Dwelling Worth Index, U.S. dwelling costs went up by 3.2% within the calendar yr 2023, just under the historic common.
Nevertheless, sure housing markets, particularly within the Northeast and Midwest, skilled dwelling value progress final yr that far exceeded the label “modest” and, in some cases, bordered on outright “overheating.” In the meantime, particular areas in Texas, Louisiana, and Mississippi continued to take care of correction-mode situations all through 2023.
Many of those areas in Texas, Louisiana, and Mississippi are grappling with an extra affordability shock, marked by spiking home insurance premiums, coupled with some regional financial softening. Texas has a double whammy being that it’s dwelling to Austin, which turned excessively frothy through the pandemic housing growth, as exterior California cash poured in. Austin was due for a correction of some type.
Whereas pinpointing the exact causes for the outperformance of 1 market over one other will be difficult within the short-term, it’s possible that some divergence will persist in 2024.
Why?
Typically talking, housing markets the place stock (i.e. lively listings) has returned to pre-pandemic ranges have skilled weaker dwelling value progress over the previous yr. Conversely, housing markets the place stock stays far under pre-pandemic ranges have, usually talking, skilled stronger dwelling value progress over the previous yr.
And in lots of areas the place pricing skilled an elevated degree of progress in 2023, akin to San Diego, stock remains exceptionally tight. Conversely, sure pockets of Texas and Louisiana nonetheless grapple with elevated stock. Notably, stock is exhibiting a notable enhance in some Florida housing markets, hinting at a possible softening in home value progress in these areas quickly.
Take into account that this evaluation makes use of pricing information with out seasonal adjustment. The very fact we’re passing by way of the seasonally mushy information window (August by way of January), coupled with mortgage charges spiking greater in fall 2023, is why a lot of the month-over-month figures (November 2023 to December 2023) are adverse. That ought to flip in lots of markets as spring 2024 information rolls in.
