90% of U.S. housing markets had price drops in 2nd half

In a homebuying world that’s become unaffordable for many Americans – no less most Californians – it’s good news for house hunters when home prices decline.

Now, most merchants facing sinking demand for their goods would drop prices and brag about the discounts. Curiously, that price-cutting logic seldom applies to home sales.

Ponder the second half of home pricing in the last six months of 2022 where 90% of 186 U.S. housing markets had price drops, according to my trusty spreadsheet’s review of stats from the National Association of Realtors. It was a swift turnabout from the first half of 2022 when just 1% of markets had price dips.

In the second half of the year, the national median sales price was off 8.2%, dropping to $379,000. The worst performance nationwide was a 21.9% drop in the formerly red-hot market of Austin, Texas. San Francisco was next (down 20.6%), then Boulder, Colo. (off 18.6%), San Jose (down 17%) and Spokane, Wash., (off 15%).

In fact, 13% of these 186 markets had double-digit price drops. Think of the folks who bought early in 2022 in these markets. They’ve lost significant equity in their new home.

Now if you forgot, the pandemic era’s homebuying spree abruptly ended in the middle of 2022 after the Federal Reserve ended its cheap-money policies and hiked mortgage rates.

That ballooned the monthly payment for a typical U.S. buyer by 58% in a year, by the association’s math. So homebuying became unaffordable for a growing swath of the house-hunting crowd.

Plus, life’s return to conditions somewhat near pre-pandemic circumstances – back to offices and classrooms, for example – further thinned demand.

As a result, one-third fewer homes were bought nationwide last year vs. 2021. Obviously, less buying meant discounting was in order.

But the home sales industry is often shy about discussing price cuts. That’s too bad.

More widespread admissions that prices are down would likely increase demand from folks who think ownership dreams are hopeless. Also, an increased acknowledgment of recent depreciation might get potential sellers to be more realistic about pricing their sought-after homes.

Sadly, I fear, too much emphasis is put on ownership’s investment potential. So, talking up price cuts might scare away folks looking at a home’s wealth-creation prospects.

Still, even after serious discounting late in 2022, the U.S. median selling price is still up 42% from pre-pandemic 2019.

Year-end downer

Consider the rapid change in the housing market.

The 8.2% price drop nationwide in the second half compared to a 13.3% gain in 2022’s first six months – or a 21.5 percentage-point downward reversal. Note that 97% of the 186 markets had some sort of pricing slippage.

Austin was the market with the harshest chill: a head-spinning 48.2-points downswing from a 26.3% first-half gain to price cuts of 21.9% in the second half.

Next was Boulder which swung 39.1 points – from a 20.4% gain to an 18.6% loss. San Francisco swung 39 points – from up 18.3% to down 20.6%. Ann Arbor, Mich. swung 35.8 points, from up 22.6% to down 13.2%. And Salt Lake City swung 32.9 points, from up 19.6% to off 13.3%.

The national association’s latest analysis focused on the deceleration in price appreciation during the full year.

Yes, the association noted 11% of the 186 markets had price losses between the fourth quarters of 2021 and 2022. But NAR highlighted a 4% gain in the U.S. median price over the year – a cooling from the 8.6% appreciation rate of 2022’s third quarter.

“A slowdown in home prices is underway and welcomed,” said NAR’s chief economist Lawrence Yun.

This is more than a slowdown.

California dreaming

The downward pricing trend also was favorable for folks dreaming of homeownership in the Golden State.

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The statewide median dropped 10% to $775,000 from June to December as the sales pace slowed by 30%.

However, Jordan Levine, chief economist of the California Association of Realtors, oddly said in a report that “home prices are holding up relatively well, despite rising interest rates and falling housing demand in recent months.”

Could you imagine a merchant from any other industry, faced with tumbling sales, putting a positive spin on their product’s relatively firm pricing?

Remember, San Francisco had the nation’s second-largest downswing in price performance in the second half. Look at other California markets in the national report …

San Jose: 30.4-point downward swing in six months from a 13.4% first-half gain to a 17% second-half loss.

Orange County: 25.9-point downswing from 13% gain to 12.9% loss.

San Diego: 25.6-point downswing from 14.3% gain to 11.3% loss.

Sacramento: 23-point downswing from 10.7% gain to 12.3% loss.

Inland Empire: 18.1-point downswing from 10.4% gain to 7.7% loss.

Fresno: 15.6-point downswing from 9.5% gain to 6% loss.

However, pricing in Los Angeles County says a lot about the state of the housing market as 2022 ended.

LA saw a 2.1-point improvement in six months – yes, an improvement – going from a 1.7% first-half loss to a 0.4% second gain.

Yes, that’s essentially flat. And yet it was the nation’s second-best performance since June.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at

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