Home prices go negative for the first time in over 2 years

According to daily readings from Parcl Labs, which looks at high-frequency listing data on both new and existing single-family homes, condos and townhouses, home prices are finally down from last year, but only by a very small percentage.

However, prices may remain softer as house prices have fallen 1.4 percent in the last three months.

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

But even then, prices were only negative year over year for a few months. It was nothing like the great financial crisis, when home prices fell 27% from a peak in 2006 to a trough in 2012, according to the S&P Case-Shiller National Home Price Index.

“Recently, we have seen a period of national softness emerge following the rapid rise in the Covid years of 2020-2022,” said Jason Lewris, co-founder of Parcl Labs. “The sharp rise in mortgage interest rates in 2022 and 2023 created an affordability shock: buyers got priced out, sales volumes fell, and sellers were forced to adjust their expectations. Historically, the combination of a credit or affordability shock, weak demand, and more inventory than the market can easily absorb is what causes broad national price declines.”

Inventories are still historically low today, but have reached near-record lows in recent years. According to Realtor.com, active listings in November were almost 13% higher than November 2024, but new listings were only 1.7% higher. Sellers are also taking their homes off the market at an unusually high rate.

Nationwide, prices are down less than 1%, but some markets are seeing more significant declines: In Austin, Texas, prices are down 10% from last year; According to Parcl Labs, there was a 5% decrease in Denver. Prices fell 4% in Tampa, Florida, and Houston, while Atlanta and Phoenix saw price drops of 3%.

There are also markets that saw gains: Prices rose 6% in Cleveland; Chicago and New York City saw price increases of 5%; In Philadelphia, prices rose 3%; Pittsburgh and Boston saw price increases of 2%, according to Parcl.

While other house price indices and surveys measure only existing home values, this one measures both new and existing values. There is no government data on housing starts, building permits, or sales of newly built homes since the start of the government shutdown, so it’s difficult to paint any picture of supply in price forecasting.

However, builders reporting quarterly earnings noted that demand was still relatively weak and incentives were still needed. Homebuilders sentiment is still in negative territory.

“We continue to see demand-side weakness as the labor market softens and consumer finances contribute to a difficult selling environment,” NAHB chief economist Robert Dietz said in November. “Following a decline in single-family housing starts in 2025, NAHB projects a slight increase in 2026 as builders continue to report future sales conditions in marginally positive territory.”

Mortgage interest rates haven’t moved much in the past three months and showed little reaction to the Federal Reserve’s latest rate cut on Wednesday. Therefore, house prices are unlikely to mean much.

“Our baseline scenario from here is not a deep national downturn, but rather a period of small positive or small negative changes from year to year, with prices hovering around zero, rather than the double-digit gains of the pandemic period,” Lewris said. “How far they go in either direction will depend mainly on mortgage rates and the overall health of the economy.”