Don’t Miss a Post. Subscribe now.

New Home Prices Drop a Record Amount Since April, Top Is In

August 2, 2022

•

10:29 pm

•

32 comments

•

Economics

Home price data via St. Louis Fed, chart by Mish

Median Home Price Details

April Median: $457,000
June Median: $402,400
11.95 Percent Decline

Average Home Price Details

April Average: $569,300
June Average: $456,800
19.76 Percent Decline

Median and Average New Home Price Since 1963

It seems things have gotten more than a bit exuberant since Nixon closed the gold window.

The size and features of a new home are certainly much better than 1963. But let’s discuss the last two years.

The pre-pandemic average price was 386,200. The pre-pandemic median price was 331,800.

Median Home Price Pre-Pandemic to Peak

February 2020 Median: $331,800
April 2022 Peak: Median: $457,000
Pre-Pandemic to Peak: 37.73 Percent

Average Home Price Pre-Pandemic to Peak

February 2020 Average: $386,200
April 2022 Peak: Average: $569,300
Pre-Pandemic to Peak: 47.41 Percent

How much more home did one get in April of 2022 vs February of 2020?

Not to worry, home prices do not constitute inflation.

Hello Recession Deniers, It’s Already Time to Ponder a Third Quarter of Negative GDP

Meanwhile, in case you missed it, Hello Recession Deniers, It’s Already Time to Ponder a Third Quarter of Negative GDP

The third quarter is not off to a great start. On the initial data reports, the GDPNow forecast took a big hit vs the initial projection on July 29.

This post originated at MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish

Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

This post originated on MishTalk.Com

Thanks for Tuning In!

Mish

Comments to this post are now closed.

32 Comments

Newest

Oldest Most Voted

8dots

3 years ago

Buy now, the crash will catch u in 2024. U got a warning sign this month. The most important ratio is Price/Rent. Both inflation and a crash

can do wonders to RE Jackasses.

KidHorn

3 years ago

If the FED QTs and keeps raising rates, I don’t see how home prices won’t go down. There won’t be enough money. I guess they could stay up if sales volumes went down. But there are limits.

Doug78

3 years ago

If the rise in housing causes official inflation figures to be understated then a drop in housing costs would cause the official inflation figures to be overstated.

Zardoz

3 years ago

Reply to Doug78

or briefly correct

JeffD

3 years ago

Mish, you calculated the new home price increase correctly, but the median home price increase was 38%.

PapaDave

3 years ago

Reply to JeffD

You are correct; good catch.

Mish

3 years ago

Reply to PapaDave

Thanks

Been very busy corrected to 37.73%

PapaDave

3 years ago

Reply to Mish

In addition to GDI vs GDP, I am also interested in tracking US diesel demand vs GDP. Since the economy runs on diesel. Higher diesel demand indicates more growth and lower demand indicates less growth or even decline.

PapaDave

3 years ago

Predicting the future is difficult. I admire Mish for trying. Still, predicting a decline in house prices is a frequent theme here, but it is often incorrect:

It’s a Bad Time to Buy a Home

Home are priced for perfection and few can afford them. I expect prices to decline.

MISH
MAY 11, 2020

Looking at the chart above, it would appear that 2020 was actually a great time to buy a house.

And, from today:

Average Home Price Pre-Pandemic to Peak

February 2020 Average: $386,200

April 2022 Peak: Average: $569,300

Pre-Pandemic to Peak: 47.41 Percent

I hope no one takes offense from this post. Just trying to keep things in perspective. The future is very difficult to predict. Mish often gets it wrong, just like the Fed, and everyone else.

Now, I am going to put in another request for Mish to discuss an alternative measure of economic growth: GDI. I would very much like to see his analysis of GDI vs GDP. Because, in spite of my post above, I remain a fan of the detailed economic analysis Mish provides.

vanderlyn

3 years ago

Reply to PapaDave

THE PLAGUE was truly a black swan event. Wuhan flu on new years eve 2019/20, made my better half, who studied plagues for a lifetime, told me it would last 2 to 5 years. i did NOT believe it. boy was i wrong. the world shut down. something out of a dumb movie i’d have turned off. mish nailed the last real estate bubble perfectly 15 years ago. saved me a ton of dough. just sold all my properties off. i like PPP as best indicator of a country health. GDP really sucks. way too much Gov spending. shadow stats is the best for inflation and money supply. mish the best for real estate analysis. hat tip, mish.

Six000mileyear

3 years ago

This was a sudden drop just to start the housing bear market. Now buyers will ask even lower prices, or sit on the sidelines longer.

Six000mileyear

3 years ago

Reply to Six000mileyear

The price drop from the 2006 bubble peak for the median and average were both about 20%, over the course off 2 years.

The price drop for the recent average is just about 20% and the median price drop is ~12% so far, in just two months.

Relatively speaking, today’s housing market is in a crash far worse than when the housing bubble burst in 2006.

Max

3 years ago

Well what about monthly payments on homes? Even though there are price drops on homes, if monthly mortgage payments stay the same because of higher interest costs then the price decrease is irrelevant

Carl_R

3 years ago

Reply to Max

That is why the price decreased. People can only pay a certain amount for the mortgage, and as the interest rate rises, they can pay less, and as the rate fall, they can pay more. That explains the rise in home prices with low interest rates, and the recent fall. Nevertheless, you are wrong in saying that the price decrease is irrelevant. Suppose you just bought a home? You are underwater, and can’t afford to sell it. Suppose you were planning on selling your house to move into a retirement home? You will have a lot less to spend than expected.

KidHorn

3 years ago

Reply to Max

It matters if you pay cash.

Zardoz

3 years ago

Reply to Max

Cash baybee!

MPO45

3 years ago

I don’t understand the numbers being reported and the numbers I am experiencing. I have been in the market for rental properties for some time now waiting for the “big crash” and I am still not seeing it. Granted, I buy RP in city centers/metros and not the suburbs or rural areas and my primary markets are Chicago, Houston, Austin and a few others I’ve been exploring and I’m not seeing massive price drops.

I see $5k or $10k off an overpriced 2bd/2bth $500k condo, for example, in Austin, TX not 30% to 50% that is being reported. I hope 50% price drops come but I will continue to wait because the math/returns don’t make sense for rental. I’d post links but this site doesn’t like Zillow for some reason. Ditto for Redfin. I actually now get less listing for the metros I’m looking at not more. Very strange.

I wish Eddie were here to ask how his rentals are doing….

klausmkl

3 years ago

Reply to MPO45

We are undergoing digestion on prices. Let’s face it, cash is worthless and property is not. War with China could change everything though.

Maximus_Minimus

3 years ago

Reply to MPO45

When there are substantial job losses, things will change.

Until then, don’t bother.

JRM

3 years ago

Reply to MPO45

So you love Socialist run cities???

I’ve seen some postings, not to trust Zillow for prices!!! Also, some reports of houses for sale on Zillow when in fact they are not for sale!!

MPO45

3 years ago

Reply to JRM

Harris County (where Houston is located) generated 51% of all tax revenue for the state. The other 36% was from Dallas, Austin/San Antonio. The rest of the state contributes nothing and leeches off the big cities (the real socialists are in rural areas). The same for Illinois. One day, when you grow up, you will learn about where and how money is made and where real capitalism exists and that’s where you will find me.

As for the Zillow posts, yet another crazy conspiracy theory that I’ll just ignore. Zillow confirms what my realtor has been finding.

RunnerDan

3 years ago

Reply to MPO45

A rentier who makes money off the poor working class, calls others, leeches! Hilarious!

MPO45

3 years ago

Reply to RunnerDan

You think poor working class can afford rentals in Austin and Chicago? How many times do I need to say this, I rent to working professionals. FULL STOP.

Zardoz

3 years ago

Reply to MPO45

… because people like you have made it impossible for anyone else to live there.

ajc1970

3 years ago

Reply to MPO45

“The rest of the state contributes nothing”

Where does your food grow? They have cattle in downtown Houston?

“you will learn about where and how money is made”

Might want to learn about where the things you buy with that money are made, instead of pointing out that you’re not being charged enough for it.

Siliconguy

3 years ago

Reply to MPO45

“The rest of the state contributes nothing and leeches off the big cities (the real socialists are in rural areas).”

Well maybe you should start paying fair prices for your oil, food, paper, metal, and electricity then. If the countryside is poor it’s because you city slickers are underpaying them for the resources they produce.

QTPie

3 years ago

Reply to MPO45

The figures in this article relate to new homes. Builders are quicker to adjust to new market conditions as they cannot afford to sit on inventory for too long. As far as existing homes… those will take longer to adjust.

Zardoz

3 years ago

Reply to QTPie

I’m seeing a lot more used house price drops in my area than new.

TexasTim65

3 years ago

Reply to MPO45

Not much decline in south Florida either.

But I’d expect major metro areas to be the last to decline because they have the best jobs/salaries. It’s the smaller towns and rural areas that will decline fastest because those places don’t have the money to support the home prices. Look at places like Boise, Idaho where prices exploded but there are no jobs to justify the prices so they have to decline if you want to sell (unless you can find out of state money).

Zardoz

3 years ago

Reply to TexasTim65

It’s been rolling in from the hinterlands where I am. Still have my searches set up from when I was trying to find something affordable out there in 2021. Most rural places have 1 or more price cuts and about 30% do in town.

I don’t give a hoot about gas or chicken, the house I want to buy is getting 10k cheaper every month. More inflation!

Robbyrob

3 years ago

Cost of a typical house in the U.S. tops $400,000 for first time

20% down? ya right

https://www.cbsnews.com/news/home-prices-housing-sales-407000-2022-06-11/

Zardoz

3 years ago

Reply to Robbyrob

Only reason it’s that low is they include the places where nobody wants to live.

Click each image to view details or purchase in the store.

Stay Informed

Subscribe to MishTalk

You will receive all messages from this feed and they will be delivered by email.

Don’t Miss a Post. Subscribe now.

New Home Prices Drop a Record Amount Since April, Top Is In

Share this:

Recommended Articles

Decorate Your Walls with Mish Fine Art Images

Stay Informed

Subscribe to MishTalk