If you've ever wanted to buy your own place or sell your current house for an upgrade, you're familiar with the rollercoaster of emotions that come with changing home prices. It involves financial goals, doubts, and a bit of anxiety that many people experience.

But if you've postponed moving because you're concerned about a potential drop in home prices, let me assure you that they're not going down. In fact, the opposite is true. National data from various sources confirms that home prices have consistently risen this year (refer to the graph below).

Here's what the graph illustrates: In the first half of 2022, home prices experienced a significant increase (the green bars on the left side of the graph). These increases were noteworthy but unsustainable.

Therefore, in the year's second half, prices underwent a correction and dipped slightly (shown in red). However, these declines were shallow and short-lived. Unfortunately, the media predominantly highlighted these drops in their headlines, which caused considerable fear and uncertainty among consumers.

What hasn't been fully covered is this: In 2023 so far, prices have once again started to rise, but this time at a more normal pace (the green bars on the right side of the graph). After the excessive price gains followed by corrections in 2022, the fact that all three reports indicate a more typical price appreciation this year is good news for the housing market.

 Orphe Divounguy, Senior Economist at Zillow, explains the changes in home prices over the past 12 months as follows:

“The U.S. housing market has surged over the past year after a temporary hiccup from July 2022-January 2023. . . . That downturn has proven to be short-lived as housing has rebounded impressively so far in 2023. . .”

Looking ahead, home price appreciation typically begins to ease up around this time of year. As that happens, there's a risk that the media may confuse slower price growth (deceleration of appreciation) with home prices falling (depreciation). Don't be misled. Slower price growth is still growth.

Why are home prices increasing now?

One reason is that there still aren't enough homes for sale to meet the demand from prospective buyers.

Despite higher mortgage rates moderating buyer demand, they also contribute to a decrease in the supply of available homes. This is due to the mortgage rate lock-in effect. When rates rise, some homeowners are hesitant to sell and lose their favorable mortgage rate, even if they plan to purchase another home with a higher rate.

As a result of higher mortgage rates impacting both buyers and sellers, the supply and demand dynamics of the housing market have been affected. However, since there are more buyers than there are available homes, prices continue to rise. Freddie Mac explains it this way:

“While rising interest rates have reduced affordability—and therefore demand—they have also reduced supply through the mortgage rate lock-in effect. Overall, it appears the reduction in supply has outweighed the decrease in demand, thus house prices have started to increase . . .”

Here's how this situation affects you:

• Buyers: If you've been hesitant to purchase a home due to concerns about its value dropping, knowing that home prices have rebounded should put your mind at ease. Buying a home offers you an opportunity to own something that typically appreciates over time.

• Sellers: If you've been postponing the sale of your house because of worries about changing home prices, it could be a wise decision to collaborate with a real estate agent and put your house on the market. You don't have to wait any longer because recent data indicates that home prices are now in your favor.

In conclusion,

If you've delayed your move because you were concerned about home prices decreasing, the data shows that they are increasing nationwide. Let's connect so you can gain a better understanding of how home prices are changing in our local area.