Is the Housing Market Cooling Off Finally?

Posted by Tom Kessler on May 20, 2022 6:30:00 AM

Is the housing market cooling?

If there’s one thing nobody can stop talking about lately, it is the housing market.

Housing prices across the country have been on the rise for the last two years, with an unexpected pandemic housing boom that seemed to have no end in sight. But…there’s a change in the air, and most of us can see it, even if it is subtle. In March 2022, the Federal Reserve announced that it was raising short-term borrowing rates for the first time since 2018. In April, average 30-year fixed mortgage rates were nearly 2 percentage points higher than a year ago. And according to our data from the National Association of REALTORS on median sales prices of existing single-family homes for metro areas, housing prices are decreasing in many markets.

Let’s get into the data so you can see for yourself.

Rewind to 2021 

For starters, we analyzed the change in median sales price of existing (not new-build) single family homes between Q1 2021 and Q1 2022. Of the largest metropolitan areas in the United States, only three markets saw decreases in those prices:

  • Cape Girardeau, Missouri/Illinois -2.0%
  • Topeka, Kansas -1.9%
  • Rockford, Illinois -1.0%
  • Bismarck, North Dakota -a fraction of a percentile (average price decreased by around $100)

The remaining 188 metropolitan areas saw increases—many of them in the double-digit percentiles. The metro area with the highest increase over that one-year period was Punta Gorda, Florida, at an astounding 34.4%.

Keep in mind: this is an annual increase—from March 2021 to March 2022. 

Q4 2021 vs. Q1 2022 Median Sales Price of Single-Family Homes for Metro Areas 

For comparison, we analyzed the change in median sales price of existing single-family homes between Q4 2021 and Q1 2022 (December 2021 to March 2022). That’s just one quarter, keep in mind, but if trends held, we’d expect to see increases in most markets. And that’s not what we’re seeing.

Over that period, 64 of the largest metropolitan areas saw decreases in median sales price. And that’s not all:

  • The metro area with the highest % increase quarter to quarter was St. Croix, Virgin Islands, at 16.28%--in just one quarter. Next highest was significantly lower: San Jose-Sunnyvale, Santa Clara, California, at 11.94%.
  • The biggest decrease was Rockford, Illinois, which saw an -11.27% change.

Different Areas of the U.S. Look Different 

Let’s take a look at how prices were impacted by regions of the United States from Q4 2021 to Q1 2022:

  • Northeast 95%
  • Midwest -1.0%
  • South 8%
  • West 66% 

A scan of the 20 markets that saw the largest % decrease in sales price tells us that most of those markets are in the Midwest and Northeast areas:

20 Albany-Schenectady-Troy, NY -3.94%
19 Dayton, OH -4.05%
18 Rochester, NY -4.11%
17 Canton-Massillon, OH -4.45%
16 Trenton, NJ -4.56%
15 Erie, PA -4.57%
14 Syracuse, NY -4.73%
13 Bowling Green, KY -4.93%
12 Elmira, NY -5.68%
11 Fond du Lac, WI -5.72%
10 Dover, DE -5.87%
9 Buffalo-Cheektowaga-Niagara Falls, NY -6.65%
8 Cumberland, MD-WV -6.74%
7 Detroit-Warren-Deaborn, MI -6.85%
6 Cape Girardeau, MO-IL -7.64%
5 Binghamton, NY -7.75%
4 Springfield, IL -9.11%
3 Topeka, KS -9.52%
2 Akron, OH -9.73%
1 Rockford, IL -11.27%

And it appears too that the Western and Sunbelt (Southeast to Southwest) U.S. remain strong, with the 20 markets that saw the largest % increase in sales price including a lot of California, Florida, Texas and Colorado:

20 Lakeland-Winter Haven, FL 7.56%
19 Las Vegas-Henderson-Paradise, NV 7.63%
18 Florence, SC 7.74%
17 Manchester-Nashua, NH 8.23%
16 Fayetteville-Springdale-Rogers, AR-MO 8.29%
15 Fort Collins, CO 8.33%
14 Naples-Immokalee-Marco Island, FL 8.76%
13 Decatur, AL 8.95%
12 Sebastian-Vero Beach, FL 8.96%
11 Anaheim-Santa Ana-Irvine, CA 9.57%
10 Abilene, TX 10.06%
9 Salt Lake City, UT 10.12%
8 North Port-Sarasota-Bradenton, FL 10.34%
7 Punta Gorda, FL 10.35%
6 Cape Coral-Fort Myers, FL 10.53%
5 Boulder, CO 10.84%
4 Farmington, NM 10.87%
3 Austin-Round Rock, TX 11.39%
2 San Jose-Sunnyvale-Santa Clara, CA 11.94%
1 St Croix, Virgin Islands 16.28%


What Does it All Mean?

 For now, it means what you see here: the housing market does appear to be cooling off, even if it is a light breeze at the moment. Sales prices are still increasing in most markets (over the quarter), but not all markets.

Just this week, the Federal Reserve chair said that interest rates will continue to rise until there is clear evidence that inflation is steadily falling. That could prompt even more cooling of the housing market, making it more expensive for home buyers to borrow.

Lesson: Look to the Data 

When you’re a business interested in where to locate your next store or site, this type of data is valuable because of the correlation between housing and a local economy. Of course, it shouldn’t be the only data you look at, but combined with other types of data, including population data, spending data, mobile activity data and more, you can get an idea of markets where your business concept could succeed.

There’s no clear consensus out there on what might come next with regard to the housing market, but it’s always wise to pay attention when you’re in a consumer-facing business. Data can help you make more informed, intelligent decisions—and at the moment, it’s clear that things are changing. Keep watching and paying attention, and if you want more insights into your customers and the markets you serve, call SiteSeer to learn more about what our powerful site selection software platform + professional services can do for you.

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Topics: Market Data, Data Study, Retail Site Selection, Housing Market

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