Price declines and increases vary dramatically in different markets.

By Wolf Richter for WOLF STREET.

Sales of single-family homes that closed in August fell by 0.3% from July to a seasonally adjusted annual rate of 3.63 million homes, according to the National Association of Realtors today.

Compared to August 2024, sales were up by 2.5%. Compared to August 2019, sales were down by 25%. Compared to August 2021, sales were down by 32%. Compared to August 2009, the depth of the Housing Bust, sales were down by 2.7% (historical data from YCharts):

Sales of condos and co-ops that closed in August were unchanged from July at a seasonally adjusted annual rate of 370,000 condos. May and June had been the record lows in NAR’s condo data going back to 2011.

Compared to August 2024, sales were down by 5.1%. Compared to August 2019, sales were down by 37% (historical data from YCharts):

Lots of supply.

Supply of single-family homes has been soaring for the past two years and after hovering at 4.5 months in June and July, dipped in August to 4.4 months. A decline in August and in the rest of the year was often part of the pre-covid seasonal patterns.

The current supply levels are the highest since mid-2016, except for Lockdown May 2020 when closed sales had collapsed, thereby causing months’ supply to spike.

Supply of condos dipped to 6.2 months in August, from the highest levels since the Housing Bust.

This is about 40% more supply than in August 2019 (historical data from YCharts):

National price measures say nothing about individual markets.

Mortgage rates in the 6-7% range are back in the lower part of the historical range before QE in 2009 began to distort everything. Those mortgage rates are not the problem; prices are the problem. They exploded by 45% and more in a couple of years, from already very high levels after years of massive increases, and now they don’t make economic sense anymore.

Too-high prices cause demand destruction, and when prices drop enough, but not until then, demand reappears. Sorting that out is what markets are for.

Prices have already dropped sharply in many markets. Here are the 14 bigger cities where prices of single-family homes have already dropped by 10% to 24% from their peaks, with Oakland and Austin booking the 24% declines.

And here are the 25 bigger cities where prices of condos dropped by 12% to 27% from their peaks, with Oakland and Cape Coral booking 27% declines, and Austin a 25% decline. Condo prices in some of the most hyped markets in Florida are now in free-fall, after huge price gains.

Here is Cape Coral – this kind of price explosion in a two-year span is economically not sustainable and has to unwind:

There are other cities with somewhat smaller declines. And there are cities where prices have held roughly level.

And there are cities with continued price gains, such as the Philadelphia metropolitan statistical area, single-family homes and condos combined:

So prices go market by market. Any national price index throws all these individual dynamics into one bucket and comes up with a national figure. And results may vary. Here are two national indices.

The National Association of Realtors produces a national median-price index of homes that sold. The median price is the price of the one home in the middle of all homes that sold that month. Shifts in the mix of what sold distort the median price, which is why the median price rises like clockwork in the spring when more higher-end homes come on the market and sell, which changes the mix of what sells toward the higher end, and shifts the median price higher. In the second half of the year, the reverse takes place, with fewer higher-end homes in the mix, and the median price shifts lower. That a shift in the mix of what sells moves the median price is the primary shortcoming of a median-price measure.

There are better measures of national home prices than the median price. For example, Zillow uses its “Database of All Homes,” which includes data from public records (property tax data), MLS, brokerages, local Realtor Associations, real-estate agents, and households across the US and includes pricing data for off-market deals and for-sale-by-owner deals. The data is far broader than the NAR’s data which only includes sales on the MLS.

The Zillow Home Value Index uses prices of mid-tier homes (middle third). Focusing on mid-tier homes substantially reduces the distortions caused by shifts in the mix of the homes that sold that month.

The ZHVI, on a year-over-year basis, turned slightly negative in August (-0.2%). The index is not seasonally adjusted.

The index had spiked by 42% from mid-2020 through mid-2025.

The NAR’s median price index soared by 47% from mid-2020 through mid-2025. The index is not seasonally adjusted.

The median price index, on a year-over-year basis, was up by 2.0% in August. The up-and-down month-to-month zigzag chaos is a result of shifts in the mix.

 

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WOLF STREET FEATURE: Daily Market Insights by Chris Vermeulen, Chief Investment Officer, TheTechnicalTraders.com.