Home Price Growth Reaches Prepandemic Levels After Volatile Three-Year Journey

Home price growth has rebounded to prepandemic levels, marking the end of a tumultuous three-year journey characterized by surging prices during a homebuying boom fueled by historically low mortgage rates followed by price declines resulting from the Federal Reserve increasing rates to combat inflation.

U.S. home prices rose 0.6% between January and February, according to a recent report from Redfin. That's about the same as the 0.6% average monthly gain in the eight years leading up to the pandemic.

Year-over-year changes tell a similar story. Home prices rose 6.7% in February compared to a year earlier. The average annual gain leading up to the pandemic was 6.9%.

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While home prices are up overall nationwide, they are down six of the 50 most populated U.S. metro areas: Tampa, Florida (-0.5%); San Antonio, Texas (-0.4%); Charlotte, North Carolina (-0.1%); Portland, Oregon (-0.1%); Fort Worth, Texas (-0.1%); and Houston, Texas (-0.1%).

Prices are likely soft in Florida and Texas because so many new homes are being built in those states.

"Home prices have plateaued here in Portland. They shot up at one point, then came back down to earth and now they're somewhere in the middle," said Meme Loggins, a Redfin Premier real estate agent in Portland, Oregon. "There's a mismatch between the attitudes of buyers and sellers. I have a lot of buyers coming in expecting a huge discount. Meanwhile, I have sellers who are standing firm on how much their house is worth after seeing their friends' homes sell for way over the asking price during the pandemic. In reality, it's neither a buyer's or seller's market."

While mortgage rates are still high, they're not nearly as volatile as they were, which has helped stabilize home price growth. While elevated mortgage rates are still negatively impacting buyer demand, it's not causing prices to drop because there still aren't enough homes for sale.

New listings have increased to their highest level in more than a year, but supply was still below prepandemic levels.

"Inventory has picked up dramatically in the past two weeks, but it's getting snatched up quickly," Loggins said. "Today, I took my clients to see a house that had only been on the market for seven hours — we toured it, they liked it and I'm about to write an offer."

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